Brexit and trade war soured 2019 flotations – PwC

Brexit and a tense trade standoff between the US and China battered Europe’s stock market flotation debuts last year, according to figures published this morning by PwC.

Proceeds from initial public offerings (IPOs) slumped 36pc to €22.1bn, while the volume of deals shrank 46pc in 2019 compared to 2018. There were 105 IPOs on European stock exchanges last year.

The top five IPOs in Europe during 2019 raised €8.6bn, or around 39pc of all the year’s proceeds.

The largest of the year was Italian payment-service company Nexi, which raised €2.1bn. It was closely followed by TeamViewer, the German software company, which raised €2bn.

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But while 2019 proved lacklustre for IPOs, there are hopes that progress between the US and China in resolving their lengthy trade dispute and the breaking of the logjam in delivering Brexit could lift the flotation market in 2020.

“IPO markets are sensitive to uncertainties and whilst there were windows of activity during the year the European IPO market has undoubtedly been impacted by US-China trade tensions and Brexit,” said Denis O’Connor, transaction services partner at PwC Ireland.

“Critically, we are now seeing progress in both US-China trade relations and the UK election result, which has given a clear steer to the markets concerning Brexit. This provides a positive backdrop to the IPO markets as we go into 2020.”

PwC said the London Stock Exchange retained its position in 2019 as the dominant market for European IPOs.

There were 26 flotations on the London Stock Exchange last year, raising total proceeds of £5.7bn (€6.75bn). The amount raised was 26pc lower than in 2018, when there were 63 IPOs.

London retained its top ranking last year due to what PwC said was a strong second quarter. There were 13 flotations in that period, which raised a total of £3.9bn (€4.6bn).

PwC said that activity in London was “particularly subdued” in the second half of 2019 due to the Brexit extension and market conditions.

IPOs on the London Stock Exchange last year included Network International, a payments processor that raised £1.1bn in April. Watches of Switzerland, a UK retailer, raised about £220m, while train travel booking app Trainline raised £110m.

Among the companies that could be flotation candidates in Europe this year is Wintershall, a German oil and gas exploration and production company. Its co-owners are German chemical giant BASF and LetterOne, an investment firm controlled by Russia billionaire Mikhail Fridman.

Italian supercar maker Lamborghini could also feature on markets. Owned by Germany’s Volkswagen, the group has been considering either selling the luxury car company or floating it, according to Bloomberg.

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