OREANDA-NEWS. August 08, 2012. A slew of IPOs worth well in excess of EUR8 billion were postponed or cancelled across the world’s stock exchanges last quarter, according to PwC’s capital markets experts.  In the last quarter, many hopeful of floating their businesses have held back in the face of growing concerns over global economic growth, particularly in China, and the ongoing eurozone debt crisis. Together these pressures have driven stock market volatility indices to their highest levels since November 2011, reported the press-centre of PwC.

The latest findings from the PwC IPO Watch Europe survey show that in Europe, after some encouraging signs in the first three months of the year, IPO activity slowed dramatically in the second quarter with some 80 IPOs raising just EUR 0.7 billion, a 40% decline in volume and a 95% decline in proceeds from the same period in 2011 when 134 IPOs raised EUR 13.4 billion (which includes the EUR 6.9 billion IPO of Glencore).  The weakness of the IPO market reflects not only the tough market conditions but also the number of companies that postponed their IPO plans by 6-12 months following the challenging market conditions in the second half of 2011.

The two largest IPOs in Europe this quarter were Brunello Cucinelli, an Italian maker of cashmere sweaters that raised EUR 158 million on the Italian Borsa and NMC Healthcare, an Abu Dhabi-based healthcare provider which raised EUR 142 million on the London Main market.

In London there were just 19 IPOs during the quarter raising EUR 0.3 billion, 46% down in volume and 97% down on value compared with a year ago when 35 IPOs raised EUR 10.3 billion.

Mark Hughes, capital markets partner at PwC, said:
“IPO activity in London has been muted to say the least. However, we are continuing to see significant interest from companies wishing to list in London, particularly natural resources companies from the emerging markets. As the markets are seeing increasingly narrow IPO windows of opportunity, companies are now more than ever focused on readying themselves to be able to execute IPOs when, and not if, those windows re-open.”

In the US, the second quarter started strongly with 27 IPOs in the first two months, but IPO activity stalled in May due to ongoing US domestic and global macroeconomic concerns. Including the EUR 12.5 billion proceeds from the Facebook IPO, total IPO proceeds raised in the second quarter of 2012 amounted to EUR 16.5 billion, 66% higher than the comparable period in 2011 and the third highest quarterly proceeds since 2007.

The markets in Asia, particularly Hong Kong, were significantly impacted by a number of large IPOs being pulled (Graff Diamonds, China Nonferrous Metal Mining and China Yongda Automobile Services).  Across the Greater China markets, in the first half of 2012 there have been 117 IPOs raising EUR 10.5 billion, a decline of 49% in volume and 74% decline in proceeds from the same period last year (229 IPOs raising a total of EUR 40.2 billion).  Elsewhere in Asia, the Malaysian Stock Exchange had the second largest IPO of the year globally after Facebook with Felda raising EUR 2.4 billion in June 2012.

The European IPO activity has been the hardest hit of the major markets and is likely to remain subdued until well into the second half of the year, dependent on renewed investor confidence and an improvement in market sentiment.

Natalia Starodubtseva, Director, Capital Markets group, PwC  Russia,  comments situation on the  Russian  market:

“The decline in IPO activity seen in 2Q 2012 did nothing to generate optimistic market sentiment regarding new share floats in 2012. However, July's successful stock offering by freight operator Globaltrans has fuelled positive expectations among both professional market participants and issuer companies, many of which, including those who had previously postponed their IPOs, are now looking ahead at the second half of the year with renewed bullishness. But, all the same, the lingering turbulence and uncertainty on global markets has served to dampen any investor euphoria, and many are now expecting that the next wave of IPOs will not happen before 2013. The high market volatility has compelled those companies now in the IPO process to react immediately to shifting investor sentiment, making a company's level of IPO-readiness an increasingly critical success factor”.