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IPO Watch Europe Q3 2002

The latest quarterly PricewaterhouseCoopers IPO Watch Europe shows a marked decline in new listings on Europe's principal stock exchanges when compared to the same period in 2001. The survey, which tracks the volume and value of European IPOs, reveals that the market slowdown has worsened over the last few months, even given the normal lull in activity over the summer period.

There were 34 IPOs in the July-September quarter, down 53% from 72 a year ago. This compares to a year on year decline of 41% in the second quarter of this year (down from 111 in 2001 to 66 in 2002). The total offering value of IPOs in the third quarter was €1,014m, a massive drop of 80% from E5,123m in the same period 2001. Although this is partly explained by the high value flotation of Friends Provident (E3,675m, London) this time last year, the fact that the level of new offerings over the last quarter was at its lowest for many years, shows the extent of market slowdown.

The total offering value in the third quarter was mainly made up of two large IPOs - Burberry (E406m, London) and ASM Brescia (E333m, Italy). A number of high profile offerings were postponed including Yell in London and the Irish drinks group C&C.

Tom Troubridge, head of PricewaterhouseCoopers London Capital Markets Group, said:

"Although the third quarter is traditionally a quiet time for IPOs, as the market all but shuts down over the holiday months, this year has been particularly slow. Worries about war, downbeat economic figures and falling stock markets have damaged an already fragile listings market, causing companies which had been set to float to postpone their plans."

The slowdown has been relatively evenly spread across Europe's main exchanges. London continues to take the majority of new listings with 56% of the IPOs in the last quarter. As with the European market as a whole, the number and value of IPOs in the London market was down on last year, from 32 to 19 in volume and E3,861m to €525m in value. Of these 84% listed on AIM, London's smaller companies market.

Euronext saw seven IPOs in the last quarter, down from 14 in the same period last year with a significant drop in offering value to E31m from E125m. There were no IPO transactions on the Madrid, Austrian, Copenhagen, Dublin, Oslo, Stockholm or Swiss stock exchanges. Dublin and Austria are yet to have an IPO this year. The Deutsche Börse had two IPOs in the last quarter raising E119m compared to four IPOs with a total offering value of E243m in 2001. The Deutsche Börse has announced the Neuer Markt is to shut, a casualty of the crash in technology stocks and lack of enforcement of regulatory rules.

The slump in IPO activity in the technology and support services sector noted in the second quarter of this year continued through the third. Speciality and other finance (asset managers, consumer finance, investment banks, mortgage finance and other specific financial groups) showed the biggest drop, down from nine IPOs in the same period last year, and in the previous quarter, to just two. Mining is the only sector to show an increase in activity from two IPOs in the third quarter 2001 to five in the same period this year. All of these flotations were in London and further mining companies are expected to follow this trend.

By way of comparison, analysis of US figures from Nasdaq and NYSE shows IPO activity fell 47% from 15 listings in the third quarter of 2001 to eight in the same period this year. The total offering value actually rose but this was largely due to a €4,963m IPO by the CIT Group which operates in the commercial and consumer finance sector.

Troubridge added:

"The final quarter of the year is typically the most active for flotations. However, given current market conditions we do not expect companies in the pipeline to attempt an IPO much before the second quarter of next year. With the equity market effectively closed for new IPOs, companies are seeking alternative finance and debt markets including securitisations are relatively more active."

Survey Methodology:
IPO Watch Europe surveys all new primary market listings on Europe's principal stock markets and market segments (including exchanges in the 15 EU member states plus Switzerland and Norway). This survey was conducted between 1 June and 30 September 2002 and captures new market listings based on their prospectus date. Additional information including data tables is attached to this release. The figures relating to the second quarter of 2002 have been restated compared to those given in the second quarter press release to include the Stockholm "O" list and the Oslo exchange.

Copyright © 2002 PricewaterhouseCoopers

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