Corporates and bankers are pulling out all the stops in order to complete the maximum number of IPOs before the summer break brings an enforced period of quiet on the EMEA region. So far this year, issuance is tracking a little behind the strong performance of 2014, with issue volumes in dollar terms down 5% and the number of listings falling nearly 12%.
Yet that picture is all set to change in the next four weeks.
Six IPOs were priced in the region last week spread across EMEA, in Oman, Sweden, France, Ireland, the UK and Germany. A further 26 IPOs are in either the bookbuilding or pre-marketing phases.
Few of the 32 deals are large enough to claim any kind of must-have status, with last week’s Spie at just shy of €1bn the only one of the six to exceed proceeds of €500m. In fact, the accelerated bookbuilds in Royal Mail and Capgemini were bigger than all the other debut deals.
A process of natural selection would typically be the result of so many deals coming at once. The market is positive and investors have cash to invest, but with investor resources finite they would not be able to study every deal. Some IPOs would be expected to struggle to gain traction and fall away.
Yet bankers are not nervous about their deals.
In part, this is because the deals are so evenly spread across multiple banks. In 2014, a handful of banks called the shots across the region, particularly as control centred on the global co-ordinator role and the contribution of bookrunners was frequently diminished. It is worth noting that this year has seen far fewer incidents where joint bookrunners are passive.
Turnaround
In a complete turnaround from 2014, there are 44 different banks working as bookrunners across the 32 current deals. Those at bulge-bracket firms have frequently complained that the market is overbanked and arguably this is proof – however, it also helps explain why banks are confident their deals will succeed.
Of the 44, half are working on just one deal. With the entire resources of the bank focused on one issue, its chances should be improved compared with one of 10 deals at a bulge-bracket house.
Indeed, the bulge bracket does not make up all the busiest firms. JP Morgan and UBS have seven live deals each and Credit Suisse and Deutsche Bank six – but SEB has five and BNP Paribas, Carnegie and Jefferies four. Goldman Sachs is comparatively quiet with three transactions.
A foil to the sheer number of deals is the diversity of offerings by sector, structure and geography. The deals that launched pre-marketing last week included Deutsche Pfandbriefbank, a Swedish healthcare provider, German fashion retailer, a Belgian biotech and a German renewable energy company.
“There is demand for specialist deals,” said one head of syndicate in Europe. “You need to capture a certain investor base, though size can still be an issue. There is a lot of competition.”
