European IPO market looks set to shrug off uncertainty to reach €25bn in 2016

Oct 10, 2016



  • Q3 European IPO proceeds decreased 17% compared to Q3 2015 – most activity was driven by the continental exchanges, with Nets A/S in Denmark accounting for 55% of European IPO proceeds
  • London hardest hit with IPO proceeds down by 50% compared to Q3 2015, with six of the nine London IPOs listing on AIM
  • Recent Hollywood Bowl IPO in London was the largest on the Main Market since March but looks to be leading the way for a flurry of activity in Q4 and into 2017
  • Short-term European IPO pipeline looks healthy across industries and markets, which could see IPO proceeds reaching €25 billion for the year.        

 

    

Quarterly European IPO activity since 2013

Despite some post-EU referendum jitters, signs point to an uptick in activity for the IPO market towards the end of 2016 and into 2017, according to PwC’s latest IPO Watch Europe report.

The subdued start to the year carried into Q3 with the low level of activity hampered by the immediate turbulence following the UK’s vote to leave the European Union.

In Q3, 52 European IPOs raised proceeds of €3.8 billion, a 65% drop from the €10.9 billion raised from 95 IPOs in Q2 and a 17% decrease in proceeds raised by 53 IPOs in Q3 2015. There were at least four IPOs planned for Q3 which were either cancelled or postponed early in the quarter, following the referendum result.

Quarterly European IPO activity since 2013

European IPO activity since 2007 (YTD and full year)

The continental exchanges were driving European IPO activity with 55% of Q3 proceeds raised by the Nets A/S IPO on Nasdaq Copenhagen in late September, which raised €2.1 billion proceeds. A total of five IPOs on the Borsa Italiana raised proceeds of €0.8 billion, accounting for 20% of European Q3 proceeds, particularly driven by the privatisation of the Italian state-owned air traffic controller Enav SpA.

Peter D’hondt, Partner at PwC Belgium, said: “Although Q3 is traditionally the quietest quarter for IPOs, this year was particularly slow. Q3 saw a number of planned transactions being delayed or cancelled allowing time to assess the impact on the market from the UK’s vote to leave the EU. As we enter the final quarter, the clouds appear to be clearing as IPO candidates seek to take advantage of the current market conditions, prior to any volatility which may result from the US presidential election.”

European IPO activity since 2007 (YTD and full year)

Impact on London

Quarterly London IPO proceeds since 2013

As foreseen, market uncertainties impacted London’s markets following the result of the EU referendum.

The Main Market has been subdued, with the £181 million (€213 million) Hollywood Bowl IPO in late September being the largest since the £400 million (€518 million) Metro Bank IPO in March. AIM, however continued to attract smaller companies with six IPOs raising proceeds of £54 million (€62 million), an increase of 19% in terms of proceeds and 50% in terms of volume on Q3 2015.

Quarterly London IPO proceeds since 2013

 

Pipeline picking up with encouraging start to Q4

There are renewed levels of IPO activity with a number of high profile opportunities seeking to IPO across Europe at the end of 2016 or early 2017.  In the UK this includes Pure Gym, TI Fluid Systems, Misys and ConvaTec that have already announced their intentions to float and Telefonica’s expected spin-off of its British mobile operation O2. On the Continent, RWE’s €4.5 billion spin-off of German renewable company Innogy started trading on Friday, while Ferrovie Dello Stato Italiane is the latest multi-billion IPO candidate resulting from the Italian Government’s privatisation initiative and is expected for 2017.

“The pipeline is encouraging, with a number of recent announcements indicating that we are in for an active Q4,” concluded Peter D’hondt. “While the full impact from the UK’s vote to leave the EU is still to be realised, the initial reaction is that it has not been as bad as had been feared. Although we are cautious as to whether 2016 manages to raise half of the €57bn raised in 2015, we do expect proceeds to reach the €25bn mark.”

 

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 the EU, Iceland, Norway, Turkey and Switzerland) on a quarterly basis. Movements between markets on the same exchange are excluded.

This survey was conducted between 1 July and 30 September 2016 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.

 

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Saskia Rademakers
Marketing & Communication Director
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Peter D'hondt
Partner
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