European IPO Activity is Strongest for Seven Years

Europe’s initial public offering (IPO) market is set for its strongest start of the year performance since 2007 before the global financial crisis broke, according to the
Financial Times
. The business daily reports that private equity (PE) companies wish to capitalise on demand from investors, who are seeking more exposure to the steady economic recovery in the eurozone.

The
FT
adds that this week has already seen the PE backers of Danish outsourcing group ISS and UK discount retailer Poundland announce plans to float the companies in Copenhagen and London, while French engineering group GTT is to seek a listing in Paris. Together they aim to sell more than US$2.3bn worth of shares. UK pet shop chain Pets at Home, owned by PE firm KKR, is likely to follow suit in a few days’ time.

The latest announcements mean more than US$8.3bn worth of European IPOs are being marketed, on top of the more than $3.2bn of flotations that have priced since the start of the year, according to data compiled by Dealogic. If each IPO proceeds according to plan, the first quarter of 2014 will be the strongest for seven years.

Gareth McCartney, head of equity syndicate at UBS in Europe, told the
FT
: “Activity is picking up because markets are buoyant with attractive valuations and market conditions are expected to remain good.”

Market sentiment has sharply improved on hopes that Europe has finally emerged from debt crisis, with IPOs proving to be a barometer the patchy international recovery since the financial crisis. While flotations quickly recovered in Europe, the US and Asia in 2010, after a slump the previous year, Europe’s IPO market fell back in 2012 because of renewed market turmoil.

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