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Strong IPO performance for Europe in Q4 bodes well for 2011

13/01/2011 09:23
The offering values of European initial listings quadrupled in the last quarter of 2010 over the previous quarter, led by initial public offerings (IPOs) in London, according to IPO Watch Europe, the PwC survey tracking the volume and value of IPOs.

European exchanges attracted just over €10bn of IPOs compared to €2.5bn in the previous quarter, while London claimed the lion’s share of initial fundraisings in Q4 with €3.6bn generated - compared with €1.7bn in Q3 2010. London accounted for 49 of the 130 European listings in the last quarter.

European exchanges successfully built on the initial signs of recovery observed in the third quarter of 2010, with major fundraisings taking place in Italy, Spain and Norway.

The largest IPO in the fourth quarter was Enel Green Power’s €2.3bn dual listing in Italy and Spain. Scandinavian exchanges attracted two IPOs that both topped €1bn, while London’s biggest single fundraising came from the float of media company Group which generated €669m.

Despite the improved performance, Europe ended up in third place for the third year running raising €26bn in 2010, behind the US which raised €30bn and Greater China which raised €98bn. The US markets benefited from the General Motors IPO which raised €11.6bn, putting their total IPO offering value just ahead of Europe. Greater China enjoyed strong activity across all the exchanges with two very notable transactions; AIA raising €12.8bn and Agricultural Bank of China raising €15bn.

Hong Kong emerged as a market attracting international listings during 2010. Investors were mainly interested in areas such as branded fashion goods or companies where there was a clear Chinese market connection.

Richard Weaver, capital markets partner, PwC, said:

“European IPO markets had a strong finish to the year with the value of deals over four times the preceding quarter of 2010. London again led the way but there was activity across a large number of exchanges.

“Despite economic and political uncertainties across Europe, stock markets have started the new year strongly and this has added to the positive momentum for the IPO markets into 2011.”

Tom Troubridge, head of capital markets, PwC, said:

“Barring any unexpected financial or political shocks, the momentum built in the fourth quarter of 2010 should continue into 2011 for Europe's IPO markets. Privatisations will feature in 2011 as European governments take steps to reduce their levels of borrowing.

“In addition to domestic deals, there should be a return of international transactions into London from emerging economies such as Russia, Kazakhstan and India. A return to the record years of 2006 and 2007 looks unlikely, but 2011 should continue the improving trend seen in 2010.

“Elsewhere, the US should also have a good year as the economy continues to recover – but IPO offering values may not reach the 2010 level which included the General Motors IPO.

“Greater China is also expected to have another strong year in line with its economic growth. An absence of the jumbo listings seen in 2010 may mean that 2011 does not see the same scale of IPOs.

“Hong Kong will continue to market itself to international companies and represents a growing competitive threat to London and New York – but only for certain companies.”