Europe needs to catch up on IPOs

From among the regions that have been hit by the recession, Asia so far is the most successful in terms of companies going public, value-wise.  Thanks to Chinese companies who have taken advantage of the Chinese government lifting restrictions on new listings.  At the moment, Asia has had $17.5bn worth in IPOs according to data from Dealogic.  The Americans also have a decent amount of IPOs so far this year.   They have so far raised $4.1bn.  Europe’s number? a measly $753m.

But there is opportunity for European firms to follow their colleagues after markets have staged quite an impressive rally the past few months and some risk appetite might already be back.  That said, they would also have to think about the possibility of having enough investors to meet supply.

A report from the FT writes:

For the European IPO market to reopen, companies will have to be convinced it is worth going public, while investors will need to be reassured they are buying into quality assets without taking on too much risk.

“IPOs are not just demand driven, they are also supply driven,” says Edward Law, head of western Europe ECM at Deutsche Bank. “The question then is when will markets reach levels high enough for owners to be comfortable selling assets? The amount of leverage in the business will also impact that decision.”

More here. And a little chart from the same FT report:

eurIPOs

For the European IPO market to reopen, companies will have to be convinced it is worth going public, while investors will need to be reassured they are buying into quality assets without taking on too much risk.
“IPOs are not just demand driven, they are also supply driven,” says Edward Law, head of western Europe ECM at Deutsche Bank. “The question then is when will markets reach levels high enough for owners to be comfortable selling assets? The amount of leverage in the business will also impact that decision.”
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