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European IPOs plummet by 81%

Latest data shows European initial public offerings took a nosedive in the fourth quarter of last year

The latest IPO Watch Europe report from PricewaterhouseCoopers (PwC) makes for painful reading.

While turbulent markets and the sovereign debt crisis has impacted on equity markets throughout the last year, the European market for company initial public offerings (IPOs) has suffered a difficult fourth quarter in 2011:

In Q4 2011, 78 IPOs raised just €866 million, an 81% decrease in offering values compared to Q3 2011 and 83% down year on year, PwC’s latest IPO Watch Europe report has found.

Out of all the cities for IPOs, London led the pack by raising €800 million, which accounts for 92% of total European IPO value, with the London IPO of Polymetal raising €421 million, 49% of all value raised in Europe. 

PwC says that:

Q4 2011 has seen companies undecided on IPO timing because of the troubled market conditions, and whilst companies are still looking to raise money, volatility continues to destabilise an already fragile market and unsettle potential investors.

However, it's not all bad news:

Despite a subdued second half of 2011, annual European IPOs raised €26.5 billion, in line with 2010.

Volumes increased by 14% to 430 IPOs. London generated €14.6 billion, more than half of money raised, despite only hosting a quarter of the IPO deals across Europe.

The top 15 deals raised €20 billion, 75% of total IPO value across Europe in 2011, with the IPOs of Glencore, Vallares and Justice in London and Bankia and Dia in Spain raising €14.6 billion in their own right.

Furthermore, Mark Hughes, capital markets partner, PwC says: 

“In 2011, the markets failed to ignite after the summer as people had hoped, due to the continuing economic uncertainty in Europe and especially in the eurozone.

Looking at the year as a whole, London has continued to lead the European IPO landscape with international and natural resources IPOs making up for the weakness of the domestic IPO market.”

But what is possibly the most interesting part of the data, is the affect on Asia. The report states:

Hong Kong saw a 43% decline in money raised, despite having attracted the IPOs of a number of international luxury -brand companies during the year, such as Prada.

In the US, the return of a number of larger deals in the first half of 2011 saw IPOs raise €25.6 billion in 2011, a 13.4% decrease on 2010, which was buoyed by the jumbo IPO of General Motors.

Looking forward, there will be a recovery for European exchanges in 2012 but it may take until the second half of the year before this recovery is seen, PwC predicts. There is also a substantial pipeline of companies 'ready to go' if a window of opportunity were to open with the right market conditions.

- Euromoney Skew Blog

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