Europe’s IPO markets top €50B in 2005; surpass US

According to PwC’s quarterly IPO Watch Survey, European stock markets saw 602 IPOs last year, up from 420 in 2004. Total offering value also nearly doubled to €50.3 billion, up from €27.3 the previous year.  That compares to only €27.5 million raised in the U.S. on public exchanges.

In all, the fourth quarter of 2005 saw 208 IPOs in Europe valued at €25.3 billion, nearly three times the amount of both the previous quarter and the last quarter of 2004.

Tom Troubridge, head of PwC’s capital markets group in London, told Science Business last week in an interview that companies are currently favoring either their home exchanges or lightly-regulated European exchanges to the U.S. markets, where Sarbanes-Oxley regulations have made it more difficult to launch deals.

That is confirmed by the high number of international listings clocked by PwC in Europe last year. There were 147 IPOs launched by non-European companies, of which 33 took place on London markets.  Continental European companies also increasingly chose London, with 12 such companies launching IPO’s outside their home exchanges--two on London’s Main Market and the remainder on AIM. The AIM listings included four Irish companies, two each from Cyprus and the Netherlands, and one each from Italy and Belgium.

Overall, large IPOs such as the €7 billion privatisation of France’s Electricite de France on the Euronext exchange helped push up the year’s figures. That also helped make Euronext the exchange with the largest market in terms of offering value in Europe in the fourth quarter, raising €10.3 billion.

Euronext was also the second most active market after London, which accounted for half of IPOs in Europe in the last quarter. Within London’s markets, AIM drove the most activity, accounting for 82 per cent of London IPO’s and 41 per cent of all European IPOs.  

Interestingly, the number of IPO’s in biotech and pharmaceutical industries more than doubled to 19 IPOs in the fourth quarter of 2005, up from 8 IPO’s in the same period the previous year, when mining and oil companies made a stronger showing.   

Significant signs of life could also be seen in other European exchanges. The Deutsche Börse saw 28 IPOs worth €1.4 billion in the fourth quarter of 2005, compared to only seven worth €10 million in the same quarter the previous year, according to PwC.  The Borsa Italiana also launched 8 IPOs in the fourth quarter totalling €1.1 billion, compared to 3 deals totalling €383 million last year.    

Working in favour of more such deals is growing investor interest in European exchanges, in particular non EU regulated markets such as AIM and Euronext and even the tiny Luxembourg stock market, according to Tom Troubridge, head of the capital markets group at PricewaterhouseCoopers in London.

"Investors are less worried about investing in more lightly regulated markets than they were a few years ago and are willing to take the risk," believes Troubridge.

AIM and other European stock markets are also benefiting from the fact that small and mid-cap companies worldwide currently seem to prefer European stock markets over NASDAQ.  "What's happened in the last 18 months is that companies worldwide are either looking to London or to a domestic exchange, rather than the NASDAQ," Troubridge adds.

News release

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