Man U an exception as IPOs rare on ground
WHILE MANCHESTER United prepare to net $100 million from an upcoming New York flotation, the IPO picture across the world is rather bleak as a result of the effects of the euro sovereign crisis on global economic activity.
Needless to say, there’s nothing stirring in Ireland. The last big-ticket inital public offering worth talking about in Dublin was Aer Lingus’s flotation in late 2006.
There have been some listings on the junior Enterprise Securities Market here in the intervening period but nothing too exciting.
So Irish investors, or at least those left with money to spend after the financial carnage here over the past four years, are having to turn to overseas markets for potential IPO prospects.
This week PricewaterhouseCoopers produced a sobering analysis of global IPOs.
More than €8 billion worth of IPOs were postponed or cancelled around the world in the last quarter, according to PwC.
This reflects growing concerns over global economic growth, particularly in China, and the ongoing euro sovereign debt crisis.
These pressures have driven stock market volatility indices to their highest levels since November 2011, PwC found.
In Europe, there were some encouraging signs in the first three months of the year but confidence has evaporated since then, as the sovereign debt crisis has worsened and fears have grown about the future of the euro currency.
PwC’s report shows that in the second quarter 80 IPOs raised just €700 million, a 40 per cent decline in volume and a 95 per cent fall in proceeds from the same period in 2011 when 134 IPOs raised €13.4 billion.
The two largest IPOs in Europe in the quarter were Brunello Cucinelli, an Italian maker of cashmere sweaters that raised €158 million on the Italian bourse, and NMC Healthcare, an Abu Dhabi-based healthcare provider which raised €142 million in London.
Neither is likely to set the pulses racing. And then there’s Facebook, which has slumped in value since its recent IPO, although those who owned the company pre the float did well, including some Davy clients.
In London there were just 19 IPOs in the quarter, raising €300 million. In value terms, that’s 97 per cent down on a year ago when 35 listings raised €10.3 billion.
The markets in Asia, particularly Hong Kong, were significantly affected by a number of large IPOs being pulled – such as Graff Diamonds, China Nonferrous Metal Mining and China Yongda Automobile Services.
Manchester United had originally planned to IPO in Asia, to tap into the huge interest in Old Trafford in the region, before pulling that plan.
This picture is unlikely to change in the near future, according to Denis O’Connor, transactions services partner with PwC here.
“The ferocity of the current conditions means that companies wanting to get their IPO away, and there is still an active pipeline, face challenging headwinds in the short term,” he said.
“It will boil down to issuers holding their nerve, being realistic about valuation and being well-prepared to access the markets when global economic conditions improve. But with the traditional summer lull approaching, compounded in London by reduced activity due to the Olympic Games, it is difficult to see a meaningful uptick in activity until the back end of the year.”
In the current climate, it’s hard to imagine any substantial IPO in Dublin for years to come, especially as many companies once much hyped for a public listing – such as One51 and NTR – have run into difficulties in the downturn.
More than €8bn worth of IPOs were postponed or cancelled around the world in the last quarter