Bankers cautious on
outlook for global equity deals after 2016 slide
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[December 30, 2016]
By Dasha Afanasieva
LONDON
(Reuters) - Global equity raising fell by more than a quarter in 2016,
data showed on Friday, hit by geopolitical shocks and a string of failed
initial public offerings (IPOs), with the outlook for 2017 looking
shaky.
Companies raised $648.9 billion in equity during 2016, against $873
billion last year, Thomson Reuters Equity Capital Markets (ECM) data up
to Dec. 28 showed.
Money raised from IPOs was down by almost a third at $130.6 billion
despite equity indices touching record highs in the latter stages of the
year.
"The markets were volatile this year. There were times when IPOs got
launched but didn't get done, and there were also fewer rights
offerings," said Achintya Mangla, head of ECM in Europe, Middle East and
Africa (EMEA) at JP Morgan <JPM.N>, which topped the league table for
global equity offerings and IPOs.
"2017 will continue to be uncertain and volatile and I'd expect IPO
volumes will be in line with this year."
Mangla added that, though he does not expect IPO activity to rise, there
could be higher overall ECM volumes with a potential increase in rights
issues and acquisition-related financing.
![](http://archives.lincolndailynews.com/2016/Dec/30/images/ads/current/graue_17_cruze_110716.png)
The year's biggest IPO, for Postal Savings Bank of China <1658.HK> in
September, was priced at the lower end of an indicative range and traded
flat before falling more than 10 percent.
Share price falls following two big European IPOs -- payments company
Nets <NETS.CO> and energy business Innogy <IGY.DE> -- put investors on
edge, resulting in bankers being unable to drum up sufficient support
for a string of other listings in the final quarter of 2016.
Market volatility was blamed for some of the canceled listings, which
normally require a window of at least four weeks to complete. In Europe,
IPOs more than halved in volume terms compared with 2015.
That could continue in 2017, with elections in France, Germany and the
Netherlands, as well as Britain formally triggering the process of
leaving the European Union, expected to limit the number of suitable
windows to launch IPOs.
WAITING IN THE WINGS
However, preparations are under way for a number of big deals that could
help to lift ECM activity in the coming year.
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![](../images/123016pics/busine1.jpg)
Arrangement of various world currencies including Chinese Yuan, US
Dollar, Euro, British Pound, in this picture illustration taken
January 25, 2011. REUTERS/Kacper Pempel/Illustration/File Photo
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Telefonica has hired UBS, Morgan Stanley and Barclays as global
coordinators to list its British mobile business O2, which could fetch
about 10 billion pounds ($12.2 billion).
A planned IPO of Siemens' healthcare subsidiary and a capital raising by
Bayer to finance the acquisition of Monsanto could also be big-ticket
deals.
Italy's UniCredit, meanwhile, plans to raise 13 billion euros ($13.6
billion) in the country's biggest share issue to shore up its balance
sheet and shield itself from a broader banking crisis.
Credit Suisse aims to list its domestic operation to raise a sum
that could reach as high as 4 billion Swiss francs ($3.9 billion) and
Deutsche Bank is said to be exploring options to beef up its capital.
There is also the potential that messaging app Snapchat's decision to
file for an IPO could persuade other technology businesses to head for
public markets.
"Tech companies have been able to achieve very attractive valuations in
the private markets, but some of the heat has come out of the private
funding arena and the IPO route is looking more attractive," said Tom
Johnson, Barclays' co-head of equity capital markets in EMEA.
"If a few large tech company IPOs go well in the United States, we would
hope to see more here, too."
However, some bankers cautioned against taking investors' apparent
rotation toward equities and away from fixed income as a guarantee for
easy share issues.
"It might look like a bull market, but investors will still be
selective," Johnson said.
![](http://archives.lincolndailynews.com/2016/Aug/26/images/ads/current/directory_buttons.png)
"Market performance has been mixed this year so there is some caution
and valuations have to reflect that."
(Editing by David Goodman)
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