OREANDA-NEWS. November 02, 2012. In Q3 2012, PwC’s IPO Watch Europe survey reported 57 IPOs raising EUR 4.4bn, compared with 81 IPOs raising EUR 0.7bn in Q2 2012 and 121 IPOs raising EUR 9.4bn in Q3 2011. The third quarter was dominated by the listing and capital raising of Sberbank, the largest commercial bank in Russia, which raised EUR 4.0bn in September, reported the press-centre of PwC.  

The traditional IPO indicators, such as market volatility and stock market indices, have improved as the quarter progressed leading to some encouraging signs as we enter the final three months of 2012, with a number of high–profile companies signalling their intention to float, including Direct Line, Megafon, Telefonica’s German O2 operations and Talanx.

Mark Hughes, capital markets partner PwC said,

“As anticipated, the low activity in first two months of the quarter reflected the traditional summer lull and London investors being preoccupied by the Olympics. Should the current market conditions be sustained, we could see a pickup in IPO activity during the coming quarters. If recently announced transactions do successfully complete and perform well in the aftermarket, this will go some way to boosting investor confidence in European IPOs.”

Rustem Teregulov, Director, PwC Russia, stated:

"The third quarter is usually the least active period when it comes to IPOs. This is mainly because of the summer holiday period, which, together with the persisting volatility on the stock market during the quarter, led to a lack of IPOs. However, Sberbank's successful SPO from placing four billion euros of global depository receipts on the London Stock Exchange at the close of the third quarter, as well as the steadily increasing number of companies that are preparing for IPOs, is giving more hope that activity will pick up on the IPO market. We will likely witness successful deals in the fourth quarter of this year and see even more in 2013, if the market allows."

In recent years, Europe has been attractive to international groups seeking to raise money on the capital markets. However, with the exception of Sberbank’s recent listing, cross-border IPOs have been in relatively short supply across Europe in 2012. However, PwC expects to see a number of foreign issuers seeking to IPO with a particular focus on London.

In recent years, a number of European technology groups have looked to the US markets to raise money. In response to this, the UK government has recently discussed proposals to make it easier for fast-growing companies to access the London markets.

Richard Weaver, capital markets partner PwC said:

“It is encouraging to see that Westminster is looking for ways to enhance the attractiveness of London as a global financial centre, both for domestic and cross border issuers. However, whether this initiative will result in a surge of technology IPOs remains to be seen until investors show their intentions.”

In the US, the third quarter finished strongly with the IPO of Santander Mexico. Overall the quarter saw 29 IPOs raising USD6.6bn, over twice the proceeds raised from a broadly flat volume compared with the same quarter last year.

The financial and technology sectors continued to drive the US IPO markets, with 58% and 13% of the proceeds, respectively. Sponsor-backed IPOs continued their strong presence, with 69% of IPOs in Q3, generating 43% of the total proceeds.  The outlook in the US remains positive with a healthy registration pipeline expected to support momentum into the fourth quarter.

In Hong Kong, IPO activity was substantially down due to a slump in the number of Chinese companies seeking to list.  Consequently at the end of 2012, Hong Kong may lose its dominance as the top global exchange for IPOs by value, which it has maintained for the last three years.

Other notable global capital markets activity could be seen in Japan and Malaysia, with the relisting of Japan Airlines and IPO of IHH Healthcare. Both IPOs featured in the top four global deals of the quarter.