M&A rebound welcome relief for IPO-hungry business
Posted by Anonymous in on Wed, 14/04/2010 - 07:50
Far be it for us to be all competitive about things, but the news that London has returned to the top spot in the European IPO league will have left many feeling even more upbeat about the prospect of economic recovery.
Having languished in third place behind NYSE Euronext and the Warsaw Stock Exchange in the previous quarter, the London Stock Exchange regained its number one position for Initial Public Offerings among European stock markets in the first quarter of 2010, according to a PricewaterhouseCoopers survey published last week.
There were 77 IPOs on European exchanges in the first quarter of 2010 with an offering value of €4,671m, compared with 55 listings that raised €5,247m in the last three months of 2009. Both quarters showed a dramatic improvement over the dismal first quarter of 2009 when Europe managed just 16 IPOs with a combined value of just €35m.
The stats will send out a strong signal to business that, after a couple of years of uncertainty and virtually non-existent activity in the M&A market, it’s time to start gearing up for some hefty deals. The pent up demand for IPOs must surely be enormous, as those businesses that had put their listings on hold as the recession bedded in look to capitalise on a renewed appetite for activity.
The last two years have been ‘character building’ for the corporate finance world, but it’s not necessarily been all bad news for the markets.
Just last week, Baker Tilly’s 14th annual Taking AIM survey of institutional investors and AIM companies suggested that the recession had left the AIM market stronger, with quoted companies on the secondary market reducing in number but increasing in strength.
Of the 300 companies that left the market last year, a majority had a market capitalisation of less than £5 million. The average market capitalisation of an AIM company is now £44 million compared with only £24 million two years ago, according to Baker Tilly.
The firm’s head of Capital Markets, Chilton Taylor, said a notable success this year had been the support institutions had given to well-managed companies on AIM, even while the markets were having a difficult time. “The market has shown itself to be an excellent source of secondary funding and we expect that to continue,” he said.
Cautious optimism is called for, and economic confidence across Europe remains fragile. It’s impossible to predict when the IPO markets will fully rebound, and when they do it’s likely to remain a buyer’s market for some time to come. However those looking to go public would do well to prepare themselves to benefit from the boost in confidence in the capital markets not to mention an improvement in the wider economy.
The Bottom Line:If Mr Cable has his way...
"If Mr Cable had his way, all the big banks would be broken up and bonuses would be virtually eliminated - a sure-fire way in my view of guaranteeing an end to the UK’s ability to compete as an international financial centre. Let’s not forget that this is a man who is on record as saying that everyone who works in a bank has an ‘aristocratic lifestyle’ clearly demonstrating his lack of understanding of the sector." A tough line on bankers’ bonuses could make a brain drain of financial talent a distinct possibility, warns Paul Marsden. Read more
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