IPO Watch Europe Q1 2012

After a sustained period of market uncertainty and volatility, the initial public offerings (IPO) market is showing some signs of recovery after a number of high-profile deals completed in the first quarter of 2012.

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Janna: Hi Mark, the last quarter we have spoken about the height of volatility at the back of Euro Zone crisis. Which were the general market trends this quarter?

Mark: Well I think this year we have actually seen some calming, some stability entering the markets for the first time in a while, so that volatility index that you mentioned is some 40% down on its peak that we saw at the back end of last year, and I think is now at a level which was broadly in line with where we were in June 2007 so you know we have not seen this stability for some time. In terms of transactions across Europe we saw 58 deals in the quarter raising some 2.3billion Euro. That contrast with just the 0.9b raised in the fourth quarter of last year, you know when we had that heightened volatility although is down on the 3b from the 95 deals that we saw at the first quarter of 2011.

Janna: Were there any specific exchanges in Europe that led the market and were there any notable transactions?

Mark: Well it was spread actually across a number of markets. The largest transaction was Ziggo which is the private equity backed Dutch cable operator owned by Warburg, Pincus and Cinven which raise some 800 Euros in Euro next Amsterdam, that was followed by DKSH in Switzerland which helps businesses set up their operations in the far east which raised just shy of 700,000,000 Euro, and then in London we saw Blue Crest an investment business and we saw Ruspetro a natural resources business from the CIS raising just under 200,000,000 Euro each. The Ruspetro is a continuation of the natural resources businesses that have looked to list in London over the last few years.

Janna: Did the US market experience similar trends?

Mark: Well in the US I think they have seen much more of an uptick from ourselves, probably reflecting the improved economic figures in the US more generally than we perhaps have seen in Europe, so they saw 44 transactions raising some 4.4 billion Euros. Interesting enough though the characteristics of a some 36 of those that came from private equity backed businesses and I believe something like 80% of those are currently pricing above where IPA value was. So that performance in the after market which is so important to restoring investor confidence has actually been relatively strong.

Janna: When we looked forward into 2012 we expected some market recovery. What are you current views on the prospects for 2012?

Mark: Well I think as we sit here now assuming that the stability in the market continues I think prospects look good for this year, although, I think in the second quarter we are going to see across Europe similar levels of activity to that what we have seen in the first quarter maybe slightly up, but I think the real kick start to the market well see in the post summer period where we will see not only perhaps renewed interest from domestic issuers perhaps some of those businesses that have previously postponed their transactions including private equity groups looking to, or private equity portfolio companies looking to access the market and also in London I think we are going to see a continuation of the theme around natural resources businesses primarily from the CIS looking to raise money on the London markets.

Janna: Mark thank you for sharing with us the insides on the activity in the first quarter of 2012 and your views about the prospects for the remainder of the year.

Mark: Thank you

A total of 58 IPOs raised €2.3bn on the European stock markets during the quarter compared to €0.9bn in the fourth quarter of 2011and €3bn in the first quarter. Average IPO offering value rose to €50m compared to €17m in the fourth quarter of 2011 and €39m in the first quarter.

The debuts of Ziggo in Amsterdam, a private-equity backed Dutch cable operator, and DSKH in Zurich, a trade and marketing company, dominated the IPO markets in Europe raising a total of €1.5 billion and accounting for 65% of the total proceeds raised in the period. As a result of these two deals, NYSE Euronext and SIX Swiss Exchange led the European IPO markets raising €975m and €681m on each exchange respectively.

Although activity remains muted compared to historical levels, the prospects for future IPOs have been boosted by the encouraging trading of a number of recent issuers and renewed market stability. IPOs are pricing at the top end of their range and have generally performed well in the aftermarket which can only be good news for those companies considering an IPO later in the year.

View: IPO Watch Europe - previous editions