Global equity listings recover after slump
Global equity listings rose in the first quarter compared with a year earlier, driven by issuance in Asia and the United States, Thomson Reuters data showed, pointing to a more buoyant year for share sales than 2016.
Companies globally issued $189 billion of equity in the first quarter of the year, up 58% from the first quarter of 2016, which was the worst since 2008.
Upbeat news on the economy helped boost equity capital market activity by US firm by almost 70%, delivering proceeds of $59 billion in the first quarter. But global issuance remained below the 2012-2016 first quarter average of $183 billion.
“We have had a backdrop of rising markets, low volatility and better macroeconomic data. These combine to produce strong appetite for new issues,” Bank of America’s global head of equity capital markets, Craig Coben, said.
“The equity calendar is highly seasonal and so the second quarter will really be a litmus test for new-issue appetite as it is generally the busiest quarter of the year.”
London, Europe’s biggest market for initial public offerings, bucked the global trend with equity listings at a five-year low.
Russell Holden, corporate partner at international law firm Taylor Wessing, said he expected this to continue as companies waited for more favourable conditions.
“With the share price gains over the past six months, combined with some uncertainty over the outcome of the Brexit negotiations, a market correction may be down the road so investors are taking a cautious approach at the moment and do not want to be overpaying for assets.”
Expected listings of Blackstone’s warehousing business Logicor and Telefonica’s UK telecoms operator O2 may bolster the IPO market in Britain in the coming quarters.
In continental Europe, Gestamp is set to become the biggest IPO this year when it lists on April 7 with a valuation of around €3.5 billion ($3.75 billion).
Goldman Sachs Group Inc overtook JPMorgan Chase & Co as the leading bank for equity capital markets globally in the first quarter, thanks to its mandates for follow-on offerings. JPMorgan kept the top spot for IPOs globally.
Representing more than a tenth of global follow-on proceeds, Italian bank UniCredit SpA had the biggest equity offering of the year so far, raising €13.8 billion and potentially generating hundreds of millions dollars in fees for banks.
The listing of Snap Inc, owner of photo sharing app Snapchat, was the biggest IPO of the quarter helping to produce a 17-fold increase in total US IPO proceeds.
Ed Sankey, EMEA co-head ECM and global head of equity syndicate at Deutsche Bank AG, said merger and acquisition activity, subsidiary IPOs and privatisations by European governments would drive deal flow.
“There was a wave of IPO exits in 201315 and this year we don’t expect to see the sheer number we saw in that time frame, especially from private equity in this time zone, but globally we expect a busier year than 2016.”