European IPO activity: slight 2016 decline expected following “bumper” 2015

BY Fraser Tennant

Mega deals with a total value of more than €1bn made the European IPO landscape a hive of activity in 2015, according to a newly-published analysis of last year’s market.

Yet, despite the high levels of activity witnessed over the past 12 months, 2016 is expected to be somewhat more subdued, with market conditions serving to hinder IPO activity in the first half of the year especially.

A key finding of PwC’s latest IPO Watch was that European IPOs finished 2015 on a high with total annual proceeds up 16 percent, totalling €57.4bn, and average offering value (excluding IPOs raising less than $5m) up 27 percent year on year, totalling €248m. In addition, London IPO proceeds decreased by 16 percent as the London market was impacted by general election fears, Chinese contagion and tumbling oil prices. PwC’s outlook for the London IPO pipeline, although still containing attractive investment opportunities, remains cautious and less optimistic than this time last year, with overall proceeds expected to fall in 2016.

Furthermore, the IPO Watch forecasts an increase in the number of postponed or cancelled deals in 2016, with many companies battling against the twin forces of market volatility and challenging market conditions. In fact, 61 IPOs were postponed or withdrawn in 2015 (2014 saw 49), 44 due to market conditions.

“As we start 2016, a cold chill has descended across pretty much every market globally – this is certainly a more complex climate to that of 2015,” said Vivienne Maclachlan, PwC’s Capital Markets director. “We rounded off last year with six bumper IPOs, which really saved the day from an annual IPO proceeds standpoint. But that stat really does mask the fact that overall it was not a particularly memorable year for London IPOs.

"This year, I would expect to see the number of companies coming to market to marginally decline, as investors continue to scrutinise investment opportunities and those that can wait, will wait. Having said that, I think 2016 proceeds will be bolstered by the continuing trend of mega deals - the too-big-to-miss-out sentiment - and that we will see a recovery towards the middle of the year.”

PwC’s IPO Watch 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.

The survey was conducted between 1 January and 31 December 2015 and captures IPOs based on their first trading date.

Report: IPO Watch Europe 2015

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