Europe's IPO pipeline looks promising for the rest of 2015 and may match 2014 proceeds

Published at 12:32 PM on 08 October 2015

 

  • Q3 2015 activity was subdued – with 53 IPOs (down 30% from Q3 2014) raising €4.6bn (down nearly a third on Q3 2014). 94% of the quarter's proceeds were raised in July before increased volatility impacted market conditions
  • Year-to-date activity remains strong with 258 IPOs raising €35.7bn, only 11% below the blockbuster levels of 2014 which saw €40.3bn being raised YTD Q3 2014
  • PwC predicts a promising outlook for the remainder of 2015 with increased activity occurring on continental European exchanges
  • We expect the return of the €1bn+ IPOs in Q4 2015 and 2016 with a number of large IPOs in the pipeline including Worldpay, Poste Italiane and ABN Amro
  • If the markets stabilise and in light of the burgeoning pipeline, 2015 may match the €50bn proceeds raised in 2014

PwC's IPO Watch Q3 2015 analysis has tracked 53 European IPOs, which raised €4.6bn , 30% less than the proceeds raised in the same period last year when 76 IPOs raised €6.6bn.

The majority of the IPOs priced in the first few weeks of the quarter and activity is yet to pick up after the summer lull. The only IPO raising more than €100m after the summer is the €132m (£96m) IPO of On The Beach Group in London.

Frankfurt was the leading exchange this quarter as it hosted the €1.2bn privatisation of Deutsche Pfandbriefbank which accounted for 25% of total Q3 European IPO proceeds alone. Looking forward for the rest of the year, Q4 is expected to be another active quarter. Proceeds of €2.6bn have already been raised on Deutsche Börse with the listing of Bayer’s spin-off Covestro, the classified ads company Scout24, and wind and solar park operator CHORUS Clean Energy in the first days of October.

 In London, despite a quiet Q3 with 9 IPOs raising a total of €747m (£536m), London YTD proceeds have exceeded €10bn and it remains the largest market year-to-date. However, YTD proceeds are down 43% compared to the same period last year (YTD 2014 - 109 IPOs, €17.8bn). Almost half of the London year-to-date IPO activity (31 IPOs, €5.0bn) is in the financial sector as investment funds and trusts continue to be in favour with the City for fundraisings.

Although publicly announced postponements did not materially change quarter on quarter (10 European IPOs have been postponed in Q3 vs 11 in Q2 2015), companies have cited adverse market conditions rather than dual tracks processes, as was the trend in the first half of 2015. Global equity markets have indeed experienced their worst quarter since 2011 as increased volatility, uncertainty over China and over the US monetary policy further unsettled investors during the summer.

 

Vivienne Maclachlan, Capital Markets director at PwC, said:

 

“The last two months have been a slightly hair raising rollercoaster ride - we have watched the fallout from the Chinese stock market turmoil as volatility indices rose to levels not seen since 2011. Equities and debt, especially the high yield market, have been battered and bruised and this market turbulence has been slow to subside. The decision being debated with investment bankers in many boardrooms across Europe is focused on the timing of launching an IPO and the markets’ receptiveness to new issuers with the key question being - when is the right time to launch?”

 

Despite the volatile markets, the pipeline is well stocked with diverse and large and high profile companies. We are seeing several €1+ billion opportunities seeking to IPO across Europe’s exchanges, such as the privatisations of Poste Italiane in Milan and ABN Amro Bank in Amsterdam.

 

Mark Hughes, Capital Markets partner at PwC, said:

 

“We await the final quarter of 2015 with interest. On one hand there is a promising European IPO pipeline made up of companies from varying sectors seeking to IPO across Europe's exchanges whilst on the other hand the markets remain challenging with investors wary of falling equity indices and continued concern over China's growth prospects. The question for companies is whether they are better keeping their powder dry and waiting for more stable markets. However, based on recent announcements it seems companies and bankers remain confident that the markets will be open in Q4.”

 

Ten largest IPOs of Q3 2015

 

Company

€m (excl. greenshoe)

€m (incl. greenshoe)

Sector

Market

Country of origin

PE backed

Deutsche Pfandbriefbank

1,086

1,157

Financials

Deutsche Börse

Germany

No

Euskaltel

764

840

Telecommunications

BME

Spain

Yes

Flow Traders

521

599

Financials

Euronext

Netherlands

Yes

ADO Properties

415

415

Financials

Deutsche Börse

Germany

No

UK Mortgages

350

350

Financials

London

United Kingdom

No

Space2

300

300

Financials

Borsa Italiana

Italy

No

Cassiopea

157

169

Health Care

SIX Swiss

Italy

No

Banca Sistema

146

161

Financials

Borsa Italiana

Italy

Yes

On The Beach Group

132

132

Consumer Services

London

United Kingdom

Yes

Menhaden Capital

112

112

Financials

London

United Kingdom

No

Total

3,983

4,235

 

 

 

 

 

 

ENDS

 

Notes to editors:

IPO Watch Europe surveys all new primary market equity IPOs on Europe’s principal stock markets and market segments (including exchanges in Austria, Belgium, Croatia, Denmark, France, Germany, Greece, the Netherlands, Ireland, Italy, Luxembourg, Norway, Poland, Portugal, Romania, Spain, Sweden, Switzerland, Turkey and the UK) on a quarterly basis. Movements between markets on the same exchange are excluded.

 

This survey was conducted between 1 July and 30 September 2015 and captures IPOs based on their first trading date. All market data is sourced from the stock markets themselves and has not been independently verified by PricewaterhouseCoopers LLP.

 

* PE and spin-off analysis excludes IPOs raising less than $50m, closed-end funds, SPACs, SPVs, Capital Pool companies, Investment Managers, REITs and Royalty Trusts

 

 

About PwC

 

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

 

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

 

©2015 PwC. All rights reserved

 


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About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 208,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.

PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. © 2016 PwC. All rights reserved

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