Strong IPO performance could mean good news for 2013
IPO Watch Europe: Fourth Quarter 2012

Quarterly European IPO activity by value

Although, economic and political conditions remain challenging across Europe, the outlook for Initial Public Offerings (IPOs) is more optimistic than we’ve seen for a long time. The value of IPOs in Europe increased by more than seven-fold year on year in the fourth quarter of 2012, making it the strongest performance since the third quarter of 2011. Overall 70 IPOs raised €7.5bn in the fourth quarter of 2012 compared with 78 IPOs raising €0.9bn in the same period in 2011. In this video Mark Hughes looks at the findings of our latest IPO watch survey.

 

Transcript

IPO markets were disappointing in 2012 with 10.9 billion being raised across the whole of the year and that contrasts with 26.5 billion in 2011 so we were well down. That said the final quarter was more optimistic in that 7.5 billion was raised across the quarter and that’s the strongest quarter since Q3 2011. So some positive signs.

In London we saw the IPO’s of Megafon and Direct Line and in Germany we saw the IPO’s of Talanx and Telefónica Deutschland, notably the German IPO’s were the largest ones on the Deutsch Börse for some time.

Aftermarket performance has been encouraging for the top ten deals across Europe which on average have yielded a return of around 15% on the offer price. In contrast the FTSE 100 is up about 6% year on year.

London’s had a difficult year in 2012 with IPO values down over 60% to €5.1 billion that said 2011 was impacted by the jumbo IPO of Glencore. Looking more broadly in the final quarter we saw the IPO’s of Megafon and Kcell which just shows that London has retained its position as being attractive to overseas companies seeking to raise capital.

Well the US has maintained its dominant position on the IPO landscape. It had a good year and also a good final quarter although that did drop off as Presidential elections took effect and the renegotiations of the fiscal cliff.

Hong Kong had a pretty disappointing year overall having performed strongly a couple of years ago but we did see some notable IPO’s in Tokyo, so the IPO of Japan Airlines and in Malaysia with the IPO of Felda.

Looking at traditional IPO indicators equity markets are at their strongest level since 2008, we’ve got volatility indices which are being stable over a good period of time and we’ve got that encouraging after market performance of recent issues, when you add all that together I think there’s some optimism there in terms of recovery in the markets, again for quality assets that are priced appropriately.

Highlights of the quarter

  • 70 IPOs raised €7.5bn
  • Strongest performance since quarter three 2011
  • IPOs of Direct Line and Megafon in London and Talanx and Telefónica Deutschland in Germany accounted for 57% of the proceeds

Highlights of the year

  • Economic and political conditions challenging across Europe for majority of 2012
  • Proceeds down 59% to €10.9bn
  • No ‘jumbo’ IPOs

Outlook for 2013 is positive

  • + Equity markets strengthening
  • + Volatility indices remaining stable
  • + Encouraging after market performance of recent issues
Top five IPOs
Five largest IPOs  €m raised Sector Market Operations 
MegaFon  1,288 Telecoms  London Russia
Telefónica Deutschland  1260 Telecoms Deutsche Börse  Germany
Direct Line  976 Insurance London UK
Talanx  767 Insurance Deutsche Börse Germany
Alior Bank  511 Banks Warsaw Poland
Total 4,802  

Sources: PwC Q4 2012 IPO Watch Europe Survey

IPO volume by exchange
Stock exchange offering value (€m) Q4 2012  Q3 2012   FY12  FY11 
London Stock Exchange  3,929 263 5,137 14,104
Deutsche Börse  2,080 26 2,141 1,523
Warsaw  653 14 731 2,200
Luxembourg  462 54 564 451
Oslo Børs & Oslo Axess  230 291 815
SIX Swiss Exchange 120 801
NASDAQ OMX 46 48 292
NYSE Euronext  17 3 1,038 154
BME (Spanish Exchange) 1 9 6,083
Borsa Italiana  7 168 503
Wiener Börse  366
Total  7,538 367 10,928 26,491

Sources: PwC Q4 2012 IPO Watch Europe Survey