European IPOs values and volume rebound from the subdued previous year

06 March 2018 Authored by Consultancy.eu

The European IPO market is picking up, as regional instability and uncertainties are better understood and ‘wait-and-see’ mode companies decide to act. London took the number one spot in terms of IPOs in the region, boasting more than 100 deals. Private equity backed IPOs remain relatively lacklustre, even while strategic exits boom for the industry.

Following a relatively slow year for IPOs in 2016, as market uncertainties – from Brexit to the US presidential elections – made themselves felt, 2017 has seen a wide range of companies that were previously in ‘wait-and-see’ mode go public, despite widespread concern.

In 2017, the FTSE 100 allegedly closed at an all time high, and the numbers have stayed high well into 2018. In addition, markets have remained remarkably stable over this period, as the volatility remained at almost record low levels last year. New analysis from PwC, leveraging data sourced from Dealogic and the stock markets themselves brings Europe’s IPO figures for 2017 into focus.

The report suggests that the stable conditions will continue in 2018 as well, particularly in light of the fact that the imminent Brexit deadline is exerting significant pressure on companies, which are hoping to complete as many deals as possible before the 2019 termination. 

Global IPO activity

London emerged as a key market for IPO activity as per the report, particularly for those looking for international listings. The city’s exchange, which had already taken on a highly international character before the Brexit decision, has continued in this nature, as business communities from emerging markets look to capitalise on London’s position as a key financial centre.

At the global level, IPO activity saw a significant rise in value for 2017, relative to 2016. Global funds raised through companies going public hit almost $200 billion; figures that were last seen in 2015. The year was particularly strong for IPOs in the Americas, the total value of which has more than tripled since last year, while Asian Pacific firms also had a strong showing. Total deal volume, meanwhile, hit levels not seen over the past decade, at more than 1,860 offerings in total.

European IPO activity

The Hong Kong and Shanghai stock exchanges were particularly active last year, although the New York exchange saw the biggest public offering by value through the offering of international social media platform Snap. The European exchanges were host to the majority of large IPOs last year.

In total there were 348 IPOs in Europe last year, raising a total of €43.9 billion in value. IPO activity was up sharply from the previous year, when there were 268 deals valued at €27.9 billion. Deal activity was below the boom years – when private equity firms in particular exited their pre-crises stock – of 2014 and 2015, with higher deal activity and higher total value raised. 2017 does reflect considerably stronger figures than the years following the crises, when IPO activity almost came to a halt in Europe (126 deals in 2009 valued at €7.1 billion).

UK IPO trends

While the country remained embroiled in Brexit politics and market uncertainties, London exchanges were the top performers in terms of IPOs – with 103 deals raising €12.5 billion. EN+ Group was the biggest deal on the exchange at €1.2 billion. The Borsa Italiana exchange came in second in terms of value, with 32 IPOs raising €5.2 billion in revenue. Nordic exchange Nasdaq came third in terms of value, at €4 billion raised, across 98 IPOs in total.

Commenting on the exceptional year for Borsa Italiana, Stefanie Lierheimer, a Director in PwC's Capital Markets Growth arm, said, "Admissions were at the highest levels since 2000 with 32 IPOs (of which companies were admitted to AIM Italia). The exchange contributed the second highest amounts of capital raised in Europe of €5.2 billion, and the largest continental European IPO of the year with Pirelli. This record year reflects the confidence in the Italian economy, together with the rising popularity of public markets as an alternative to private fundraising or debt. Nonetheless, in 2018, some slowdown in the Italian IPO activity is expected in connection with uncertainties around the outcome of the Italian general election in March 2018."

European IPO value

In terms of breakdown of deals on the London exchanges, the Main market accounted for the vast majority of offerings in terms of value raised across the three quarters, at more than two thirds of total value in the respective quarters. The markets picked up significantly since the end of 2016, however, with just €200 million raised on the Main market and €100 on AIM. In terms of volume, the AIM market was more active across the past two quarters, highlighting its role in smaller offerings.

Private equity backed IPOs

The research notes that the European private equity industry has, proportionately, seen lower overall offers raised through IPOs in 2017 relative to previous years, at 31% of total value in 2017 compared to 54% in 2016 and 44% in 2015. Volume of private equity backed exits through IPO has been relatively low in 2017, at 39% of total deals, compared to 51% in 2016 and 40% in 2015.

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