Big is beautiful for IPOs in 2015
December 11, 2015
As the final curtain falls on 2015, big has indeed proved beautiful this year.
I don’t think I’m alone when I breathe a sigh of relief as we come to the end of 2015 – it’s certainly been a busy one! Despite seeing significant disruption and volatility over the summer, I’m anticipating annual IPO proceeds of more than €58bn across Europe. Q4 delivered five ‘mega’ IPOs raising more than €1.5bn each. These gargantuan deals are one of the key reasons that 2015 has exceeded last year by 15%. The mega deal dominated both the merger and acquisition (M&A) and initial public offering (IPO) markets this year and generated a significant amount of buzz at the back end of the year.
We’ve seen London continue to hold its top spot as the most active exchange - with estimated FY15 proceeds of just over €16 billion. In the final quarter the average deal size rose to over €380m. This was primarily due to the €3.4bn Worldpay IPO – the highest average deal size since Q2 2011 (€491m), when the jumbo IPO of Glencore completed.
Although activity was slow to pick up in the second half of the year and market jitters were clearly seen, I continue to be optimistic about the prospects for 2016. Good after-market performance for the deals that completed this year sets the scene for a robust pipeline of companies waiting in the wings to access the market. Having said that, I expect a softer start to the New Year with perhaps a lower number of deals. But I won’t be surprised if we see a continuation of the mega-deal trend.
2016 looks set to be the year of privatisations, specifically in continental Europe, with a wave of candidates expected to access the IPO markets in the first half of the year across a number of sectors. Here in London however, my eye will be on the financials and industrials sectors and their continued dominance. For Europe as a whole, I estimate the first half of 2016 to yield circa €25bn of proceeds, falling back from the supercharged levels seen in H1 2015.
How do you foresee 2016 playing out in the IPO market? Share your thoughts below or schedule a meeting to discuss your situation in confidence.