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New realities: Shrugging off the Asia effect

Despite the upheaval in Asia, investment bankers expect a near-record number of privatizations and IPOs in Europe and the US this year. By Nigel Dudley

A SUPPLEMENT TO EUROMONEY/MARCH: MARKETS 1998

Investment bankers are confident that the volume of new equity issues in 1998 will at least match last year's level. In 1997 a strong market delivered record levels of privatizations and initial public offerings (IPOs) in Europe and Asia, and a robust performance in the US.

Asia will be a virtually dead market for at least the first half of 1998 - and probably for the whole year. But Europe, driven by privatizations in both the west and east, could see as much as $110 billion of primary issues. In the US more than $40 billion could be raised.

"Governments and companies need to continue to raise capital. It can be raised if pricing can be offered at an acceptable level," says Michael Lavelle, director, equity syndication manager at Salomon Smith Barney. "IPOs will generally outperform the secondary market. If there is an exciting growth story, people will look at the issue."

At Goldman Sachs, managing director Michael Evans argues that "in Europe the markets will continue to be receptive to a fairly heavy volume of new issues. We are bullish on most European markets".

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