OREANDA-NEWS.  January 29, 2013. The value of IPOs in Europe increased by more than seven-fold year on year in the fourth quarter of 2012, making it the strongest performance since Q3 2011, which saw 121 IPOs raise EUR 9.3bn., reported the press-centre of PwC.    

70 IPOs raised EUR 7.5bn in Q4 2012 compared with 78 IPOs raising EUR 0.9bn in Q4 2011, PwC IPO Watch survey found.

The quarter was dominated by the IPOs of Direct Line and Megafon in London and Talanx and Telefonica Deutschland in Germany which accounted for 57% of the proceeds raised in the quarter. Encouragingly, these IPOs have also performed well in the aftermarket.

Looking at the year as a whole, 2012 proved a challenging year with 263 IPOs raising just €10.9bn, compared with 430 IPOs raising EUR 26.5bn in the prior year, a 59% decline in value. London remained the dominant market in Europe in 2012 with 73 IPOs raising just EUR 5.1bn compared with 101 IPOs raising EUR 14.1bn in 2011, which was boosted by the jumbo IPO of Glencore which raised EUR 6.9bn. After a quiet summer, London finished the year strongly with 26 IPOs raising EUR 3.9bn in the final quarter compared with 17 IPOs raising EUR 0.8bn in the same quarter of the prior year.

Rustem Teregulov, Director at PwC Russia, commented on Russian market trends:
“We are optimistic about 2013, as are I think most market participants. MegaFon and MD Medical Group's IPOs in Q412 indicate a beginning of a market recovery. Both are currently trading above the IPO price, which is another positive signal to the market. We also see an increased interest of companies, some are on the early stages of preparation, others who have put their IPO plans on hold seem to be considering a flotation again if the markets permit. I hope that IPO of MICEX/RTS IPO is a success and will give more confidence to investors in Russian IPOs in 2013”.

Richard Weaver, capital markets partner, PwC said,
“Although, economic and political conditions remain challenging across Europe, the outlook for IPOs is more optimistic than we’ve seen for a long time. “Whilst London retained its number one position in Europe for money raised, IPO activity returned to a number of the major European exchanges in the final quarter of 2012 with the IPO of Telefonica Deutschland being the largest IPO on the Deutsche Borse for 5 years.”

The US IPO market began robustly in the fourth quarter, with October IPO volume equalling that of March - both months were the highest of the year with 21 IPOs each. IPO activity slowed down in November as investors turned their attention to the Presidential election and as companies waited for clarity on U.S. fiscal policy. Overall, EUR 4.9bn was raised in the US, compared with EUR 4.8bn in the prior year and EUR 5.2bn in the prior quarter.

EUR 4.5bn was raised in Hong Kong in Q4, down on the EUR 6.3bn raised in the prior year but up on EUR 1.4bn raised in the prior quarter. The market continues to be affected by the uncertainties in the global economy. The largest IPO of the quarter in Hong Kong was the People's Insurance Co of China, which raised EUR 2.8bn in early December.

Mark Hughes, capital markets partner, PwC said:
“With equity markets strengthening and volatility indices remaining stable coupled with the positive after market performance of recent issues and the short-term deal to stave off the US ‘fiscal cliff,’ the outlook is encouraging as we head into 2013”.

“Collectively, these factors should provide an impetus to those companies who have been biding their time during 2012 as well as provide investors with the confidence to loosen their purse strings for quality IPOs priced sensibly.”