IPO activity stalls in Europe amid Brexit uncertainty

Report shows sharp reduction in firms going public to raise funds in run-up to UK vote

A breakdown of the figures in PwC’s latest IPO Watch report showed activity in the second quarter, while poor in comparison to last year, almost tripled the value of funds raised in the first quarter. Photograph:  Philip Toscano/PA Wire

A breakdown of the figures in PwC’s latest IPO Watch report showed activity in the second quarter, while poor in comparison to last year, almost tripled the value of funds raised in the first quarter. Photograph: Philip Toscano/PA Wire

 

The value of initial public offerings (IPOs) in Europe stalled in the second quarter amid the uncertainty over Brexit.

According to PricewaterhouseCoopers (PwC), the value of IPOs shrank by 26 per cent just under €11 billion in the run-up to Britain’s vote on EU membership.

The decline was even more precipitous in London, which represents about 11 per cent of European activity, where it fell 75 per cent to €1.2 billion, a seven-year low.

On current trends, the value of IPO activity across Europe will be no more than €25 billion by the end of the year, less than half of the €57.4 billion raised by firms last year. However, PwC forecasts an increase in activity towards the end of this year and into next year.

Poor in comparison

Overall, 95 European IPOs raised €10.9 billion in the second quarter, compared with 50 IPOs raising €3.5 billion in the previous three months.

Activity was largely driven by the continental exchanges, with over 70 per cent of second quarter proceeds raised on OMX, Euronext and Spanish exchanges.

These exchanges benefited from a number of privatisations and spin-offs boosting their volumes, such as Dong Energy, which raised €2.3 billion, ranking it as the largest IPO year-to-date globally in Copenhagen, and Dutch insurance group ASR, which raised €1 billion.

There was no breakdown for activity in Ireland.

“Companies, investors and bankers are all still grappling with what the EU referendum result means for the UK economy as well as the rest of the EU,” said Denis O’Connor, transactions services partner at PwC Ireland.