The total offering value of IPOs in the third quarter was €4,665m, up from €2,687m in the like period of 2003 although down from the €8,728m figure for the second quarter of this year. Last quarter’s high total offering value was partly explained by three large IPOs – Deutsche Postbank, Terna and Snecma. The largest IPO of this quarter was Pages Jaunes (raising €1,252m on Euronext) in July, followed by Premier Foods (raising €588m on London) also in July.
Tom Troubridge, head of PricewaterhouseCoopers London Capital Markets Group, said: “IPO activity continued into July from the busy second quarter with over half by number and three quarters by value of the third quarter activity in that month. Other than AIM, the activity across Europe has been quiet since July. Investors continue to drive a hard bargain with the larger IPOs in the quarter being priced at the lower end of the price range.”
London was once again the most popular market for IPOs. Its 88 IPOs accounted for 75% of total offerings by volume in the last quarter. In value terms there was a marginal increase to €1,928m from €1,713m in the like period of 2003. The average offering value of IPOs in London fell from €122m to just €22m. This was mainly due to the strong growth of the smaller companies’ market AIM which accounted for 84 of the 88 IPOs in London in the last quarter. Increasing numbers of foreign companies have been attracted to this predominantly small and medium-sized enterprises exchange. AIM saw an increase from five IPOs from non-UK companies in the third quarter of 2003 to 11 in the same quarter this year which included two Italian companies.
Euronext’s IPOs raised a total of €1,692m, only slightly less than the €1,928m in London, due largely to it having the largest IPO of the quarter - Pages Jaunes - which accounted for 74% of the total offering value. With 12 IPOs in total, the average offering value in the quarter was €141m in contrast to London’s €22m.
Warsaw recorded 11 IPOs last quarter, up from just one in the same quarter last year and five in the second quarter of 2004. The total offering value of IPOs in Warsaw fell this year from €166m in the second quarter to €128m in the third quarter.
The three IPOs on the Borsa Italiana in the third quarter of 2004 had a total offering value of €753m in comparison to the €1,345m raised from the two IPOs in the second quarter of this year. However, the latest quarter was an improvement on the third quarter of last year when no IPOs were recorded.
The Deutsche Börse saw an increase from no IPOs in the third quarter of 2003 to one IPO (raising €42m) in the third quarter of 2004. This was down on the three IPOs recorded in the second quarter. The cancellation of the IPO of Hapag-Lloyd, a container logistics company owned by Tui, Europe’s largest travel agency, had an impact on the most recent quarter. The only IPO due on the Madrid Stock Exchange for the quarter (Probitas Pharma) was also cancelled. Pricing was one of the major reasons for these cancellations as sellers could not reach satisfactory values.
Athens, Dublin, Helsinki, Luxembourg, Oslo, and Stockholm all passed the last quarter without an IPO.
Industry sectors that experienced the most IPOs in the last quarter were Speciality & Other Finance (with 23 IPOs, well up from one in Q3 03 and eight in Q2 04), followed by Support Services (with 10 IPOs, a rise from none in Q3 03 but the same amount as in Q2 04). Although there were two IPOs in Real Estate in both the third quarter of this year and last, this was a significant decrease from the nine seen in the second quarter of this year. The flow of General Retailers IPOs has dropped from the five seen in the second quarter of this year to just one in the last quarter. Defence, Internet, Leisure & Hotels, Medical Equipment & Supplies, Mining, Oil & Gas and Pharmaceuticals have all seen a significant rise in numbers of IPOs last quarter compared to 2003.
Looking ahead to market prospects, Tom Troubridge said: “The outlook for the remainder of 2004 is less clear. The market has had a good run in the year to date but recent cancellations, downward pressure on valuations, and lack of a strong pipeline are indicative of the uncertainty facing IPO markets. World political events, including high oil prices and the impending US elections, are also a factor.”
He added: “Looking further ahead to 2005, on 1 July the EU’s new Prospectus Directive becomes law in all member states. One significant implication of the Directive is that some or all of the financial information in a prospectus for 2005 IPO candidates will have to be presented in accordance with International Financial Reporting Standards (IFRS). In some cases, the requirement to provide IFRS information for the first time in early 2005 may prove a significant obstacle to achieving a successful IPO.”
The US IPO market has had a good quarter with Nasdaq and NYSE seeing increases respectively from 14 to 38 and seven to 18 in IPO volumes compared to the third quarter of 2003. Nasdaq raised €5,243m in the third quarter of 2004, up from €1,589m in the like period last year. Meanwhile, the NYSE raised €5,446m in the third quarter of 2004, up from €2,507m a year ago. Four IPOs in the Information Technology and related sectors accounted for over half of the money raised and included Google.
Greater China recorded a fall in the number of IPOs from 74 in Q3 2003 to 67 in Q3 2004. Funds raised decreased from €2,853m to €1,339m.
Tokyo saw 22 IPOs in the last quarter, up from 13 in the third quarter of 2003, of which 19 were smaller offerings on the Mothers market. The offering value in same period dropped from €1,002m to €372m.
Click here to download the IPO Watch Europe data tables for Q3 2004.
The current and previous IPO Watch Europe Surveys are available at http://www.pwc.com/uk/eng/about/svcs/gp/IPO.html.
