Bloomberg News

IPOs Will Rebound in Europe as Confidence Returns, Rabobank Says

July 08, 2011

July 8 (Bloomberg) -- Companies will complete more initial public offerings and share sales in the second half of this year because a rally in stock markets will increase investor appetite, according to Rabobank Groep.

Concern that Greece will default on its debt marred equity issuance in the first six months of 2011, with 21 companies pulling their IPOs from European markets, the most since at least 2006, according to data compiled by Bloomberg. Rene van Vlerken, Rabobank’s head of equity capital markets, said that companies’ aversion to stock markets is temporary.

“Market sentiment is going to improve as long as company earnings don’t disappoint,” he said in an interview in Utrecht yesterday. “The rest of this year is going to be better in terms of deals coming to the market and getting priced. Equities, over the next 6 to 12 months, are going to improve.”

European stocks have surged 4.9 percent in the past nine days as Greek lawmakers passed a five-year austerity package, qualifying the country for further European Union aid. Even so, the Stoxx Europe 600 Index remains 4.7 percent below this year’s high on Feb. 17 amid speculation that the region’s sovereign- debt crisis will derail the economic recovery.

More companies have filed for IPOs in western Europe than at any time since 2008, according to data compiled by Bloomberg. In the first half of this year, companies pulled sales that they expected would raise as much as $8.9 billion, according to Bloomberg data. Cie. de Saint-Gobain SA, Europe’s biggest supplier of building materials, last month delayed an IPO of its Paris-based packaging unit, Verallia. Saint-Gobain had sought as much as $1.4 billion for the division.

“This doesn’t mean 2011 is going to be a loss year” for IPOs and share sales, Van Vlerken said. “We don’t believe there is going to be a second downturn for the global economy and companies are well positioned for the next couple of years. This is a good environment.”

Alcoa Inc. will unofficially kick off the second-quarter earnings season in the U.S. on July 11. America’s largest aluminum producer will publish its results after the close of trading in the U.S.

--Editors: Will Hadfield, Andrew Rummer

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

To contact the editor responsible for this story: Andrew Rummer at arummer@bloomberg.net


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