The Strategist

PwC: volume of European IPOs halved in 2016

12/22/2016 - 16:52

Volume of funds raised under initial public offerings (IPO) on stock exchanges in Europe will double-fall by the end of the year to 28.4 billion euros, PwC's experts predict.

Number of transactions declined by almost a quarter, according to study of the audit and consultancy company, which covers the period from 1 to 30 November. Despite these trends, PwC's experts believe that the IPO market will maintain viability, and compliant companies will be able to get access to capital at a reasonable price.

Meanwhile, Nasdaq Nordic stock exchange may be the most active area in terms of both value and number of deals since it held 3 out of 10 largest IPO of the year. The most significant was EUR 4.5 billion-worth Innogy’s placement in Europe. The subsidiary of RWE Group chose Deutsche Boerse.

Total amount of funds raised on the London Stock Exchange (LSE) decreased by approximately 60% compared to the previous year, while number of transactions declined by almost 35%. The largest IPO, held on the LSE in the IV quarter of 2016, was initial public offerings of Convatec, worth EUR 1.7 billion. In 2016, 34 IPO transactions were canceled or postponed, compared to 61 deals in 2015.

"In 2017, investors will be watching elections in France, Germany and the Netherlands, outcome of which could destabilize the IPO markets in Europe. Despite this uncertainty, the European IPO market seems viable; investors are looking for profitable opportunities to devote money to a company with a successful history of investing,"- said Mark Hughes, partner in the London Capital Markets group at PwC.

As for the US, the outgoing year was probably the worst for the IPO market since 2003. Local companies raised only $ 24 billion, according to market research firm Dealogic.

In 2017, global IPO market will not have time to recover after shocks of 2016’s end, writes Tom Taulli, a financial analyst and publisher of IPO Playbook, in his review, but investors can still expect a slight recovery. According to Taulli, the most important transactions of the coming year will be public offerings of technology start-ups. There, he expects to see many "unicorns", i.e. companies with an estimated market capitalization of $ 1 billion. This includes Internet service of short-term housing rental Airbnb, music streaming service Spotify, social network Pinterest, software developer Palantir Technologies, owner of a cloud storage service Dropbox and social photo-sharing Snapchat. In addition, investors in 2017 will continue to wait for placement of IT-companies such as Uber, which created a popular mobile app for calling a taxi or a private driver. After the last round of investment, estimated value of the service soared to $ 68.5 billion, but it is unclear whether Uber will dare to offer its shares to investors on the stock exchange in 2017, said Taulli.