1. European IPO Hopefuls Tap Narrow Window
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* Companies eye window ahead of early Easter, market wobbles
* Convalescing new listings market continues recovery
* Investors move money into stocks, but cautious on IPOs
LONDON, Jan 21 (Reuters) – European companies looking to
make their stock market debut have a couple of months to act
before an uncertain economic outlook risks sidelining a recovery
in new issues and an early Easter interrupts their sales pitch.
Ebullient stock markets have so far this month encouraged
around half a dozen firms in Europe to launch plans to float,
seeking to raise more than $3 billion in the first few months of
the year.
But there are reasons on both sides of the Atlantic why
those seeking to seize the moment will want to act fast, and
certainly before stock markets close for Easter and many
investors head off on holidays.
Parliamentary polls in Italy next month could put Prime
Minister Mario Monti’s reform programme in doubt and put paid to
the current calm in Europe’s debt woes, and the U.S. body
politic, still nowhere near a lasting budget deal to balance
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2. taxes and spending, is preparing to do battle again.
“The U.S. fiscal cliff revisit in February or March could
cause some wobbles, and the Italian elections in mid-February
could also cool things down, so if you wanted to get a sale
away, then you would be looking to act now before the conditions
change,” said Neil Wilkinson, European equities fund manager at
Royal London Asset Management.
Europe’s IPO market, which has been struggling during the
region’s long debt crisis and sluggish economic growth, started
to show signs of life in the final months of 2012 as confidence
picked up.
On Monday, Russian trading venue the Moscow Exchange and
British housebuilder Crest Nicholson announced plans to float,
while German residential property group LEG was due to begin
roadshows for its planned 1.4 billion euro ($1.9 billion)
listing.
“There is a finite window now for things to happen,” said
one banker working in equity capital markets (ECM), the part of
an investment bank that runs share sales including initial
public offerings (IPOs).
Most companies choose to launch listings after publishing
their full-year results, but some advisors said getting those
audited ready in time to complete the month-long IPO process
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3. before the traditional Easter slowdown will prove a challenge.
This year Easter day falls on March 31 – only once in the
last 100 years has it been earlier – and much of Europe will
clock off for a long weekend.
“Numbers-wise, it is hard to come ahead of an early Easter,”
said a second ECM banker. “It is a bit too ambitious for most
companies … from an accountancy perspective.”
BUYERS’ MARKET
Around $3.7 billion was raised from IPOs in Europe, the
Middle East and Africa in the first quarter of last year, and
$17.4 billion over the whole of 2012, compared with more than
$100 billion in 2006 before the financial crisis hit.
Despite the paucity of deals and a poor recent precedent in
last year’s Facebook IPO in the U.S., investors on the
whole did well out of European IPOs in 2012, with six of the
biggest now more than 20 percent above their float price.
While the recovery remains fragile, a lack of IPO activity
through much of last year has left a backlog of deals that could
come to market in 2013, bankers said.
There are signs these deals will be welcomed by investors.
Latest fund sales data from Skandia, part of the Old Mutual
Wealth investment platform, suggest money is slowly moving away
from so-called safe havens of cash and property towards equity
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4. investments.
Sales of cash funds on its platform fell 25 percent in the
last three months of 2012 compared with the previous quarter,
while sales of European equity funds jumped by 20 percent.
Royal London’s Wilkinson said that with so many ‘tried and
tested’ companies looking such good value, bankers would have to
work hard to convince money managers to invest in new stocks.
“It’s a buyer’s market … There are some managers who just
won’t participate in IPOs. I am not one of them, but you do have
to analyse each one on its own, and it takes a lot of work
before deciding to get involved,” he said.
“It’s not that the books are dressed up, but we are aware
the business is being made to look as attractive as possible.”
Despite a contraction in the German economy in the final
quarter of 2012, there is talk of more German residential IPOs,
including Deutsche Annington, in a market where property yields
are about 4.5 percent for the best housing and 6 percent in
secondary locations.
“Yields are not especially high, but it’s all about
stability,” said Joseph Schaesberg at property consultant CBRE
. “If you’re looking for stability, come to Germany. If
you want higher returns, go further east.”
Polish real estate holding firm PHN and Russian private
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5. freight rail operator NefteTransService are also among those who
have unveiled plans to list.
Some investors and bankers said the idea of an Easter
deadline was overblown, given that not all countries celebrated
the Christian festival, and the pre-marketing stage of the IPO
process could still run over a long weekend.
“I can see a lot of deals running over Easter,” said one ECM
banker. “If the market is there you have got to take it.”
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