First half of 2018 characterised by mega-IPOs but trade wars and Brexit could yet unsettle Europe’s stock markets.
The European initial public offering (IPO) market raised €21.8bn from 168 flotations on stock exchanges in the first half of 2018, up 5pc in money raised and 4pc in the number of IPOs compared with last year.
PwC’s IPO Watch Europe reported that the increase in activity was largely due to the strong first quarter of 2018 where European IPO values were boosted by the mega-IPOs of Siemens Healthineers and Deutsche Bank’s DWS Group on Deutsche Börse.
‘With the potential trade war between the US and the rest of the world, as well as the ongoing Brexit negotiations as we move into the second half of the year, volatility could well creep back into the markets, potentially unsettling the IPO markets across Europe’
– DENIS O’CONNOR
Things became more subdued by the second quarter, however, with total proceeds for the quarter of €9.3bn raised from 99 IPOs, a decrease of 43pc in money raised and 7pc decrease in the number of IPOs compared to Q2 2017, when 106 IPOs raised €16.2bn.
In mainland Europe, the Nordic exchanges continue to be active, with 24 IPOs raising €1.8bn in Q2. The largest IPO in the region was Kojamo, a Finnish real-estate business.
The largest IPO of the second quarter of 2018 was Ceva Logistics, which raised €1.1bn on the SIX Swiss Exchange, representing 12pc of the total Q2 IPO values, and it was the only mega-IPO this quarter.
A vision of volatility
London Stock Exchange was the number-one European exchange in Q2 by volume and value, with IPO proceeds up 25pc on last year and 25 IPOs raising £2.5bn compared with £2bn from 24 IPOs in Q2 2017.
Despite Brexit, London is still attracting cross-border IPOs, with two of the top five European IPOs in Q2 taking place in the city. Czech-based Avast Plc and Africa-focused Vivo Energy raised £692m and £603m, respectively.
The technology sector dominated UK IPOs and accounted for 40pc of the money raised in Q2, which included the third-largest IPO of the quarter, Avast Plc, as well as gaming companies Codemasters Group and Team 17, which raised £185m and £108m on AIM, respectively.
“In March, Euronext completed the acquisition of the Irish Stock Exchange and began trading as Euronext Dublin,” said Denis O’Connor, head of transaction services at PwC Ireland.
“Activity at Euronext Dublin has been very strong to date in 2018; activity included the IPO of VR Education, a virtual-reality software and technology company, in March.
“Yew Grove REIT Plc, a newly incorporated Irish Real Estate Investment Trust (REIT), raised €75m through its initial public offering in June, and Glenveagh Properties has just announced that it is looking to raise more than €200m in fresh equity.”
O’Connor said that across Europe, the first half of the year ended with the 5pc increase in IPO values due to the mega-IPOs but warned that the markets could yet be rocked by events beyond their control.
“With the potential trade war between the US and the rest of the world, as well as the ongoing Brexit negotiations as we move into the second half of the year, volatility could well creep back into the markets, potentially unsettling the IPO markets across Europe.
“Despite a more subdued second quarter, and the current economic and political outlook, the market is open and deals are being done.
“Pricing will likely remain a challenge and investors are increasingly selective. That said, we expect to see the volume of IPO activity picking up again in the second half of the year.”