International listings fuel IPO comeback

The number of Initial Public Offerings across Europe almost doubled in the three months to September 2009, while the total value of all deals nearly quadrupled ­ suggesting IPO investors are returning to the market after a long drought, according to research from PricewaterhouseCoopers.

The Big Four auditor’s figures show that between July and September 2009, a traditionally quiet time for IPO activity, there were 44 IPOs across Europe, raising almost E1.8bn. That compares to the previous quarter in which just 28 deals raised a far more modest E456m.

Ninety-seven percent of the cash raised by IPOs in Q3 2009 came from international companies listing on European exchanges, led by the London Stock Exchange which saw E873m raised by five listings, two on its main market, two on the Alternative Investment Market (AIM) and one on the Professional Securities Market. The London IPO of Rushydro, a Russian power generation company, raised E424m on its own, while the second-largest IPO of the quarter was Tata Steel’s listing of Global Depository Share Offerings which raised E355m.

Richard Weaver, a partner in PwC’s capital markets group, believes the figures signal investors are beginning to return to the IPO market. That marks a move away from the secondary offerings companies made to strengthen their balance sheets in the first half of 2009. “With investor sentiment appearing to improve and with a pent-up supply of private equity portfolio companies considering an IPO exit, we continue to believe there will be a substantial pick-up in IPO activity in the first half of 2010,” Weaver said.

The numbers compare with IPO trends for Q3 2009 in the US where 20 IPOs raised just over E4bn, on the back of four international offerings from China and Hong Kong, while Russia’s IPOs market saw no activity in the quarter.

“With some advisers taking the view that there will be a race to market once the IPO window re-opens, our advice to those considering a listing would be to get their preparations underway now and be ready to get their IPO out ahead of the competition.”