March 30, 2017 / 11:22 PM / 4 months ago

Global equity listings start to recover after 2016 slump

LONDON (Reuters) - 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 $193 billion of equity in the first quarter of the year, up 61 percent from the first quarter of 2016, which was the worst since 2008.

"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.

Upbeat news on the economy helped boost equity capital market (ECM) activity by U.S. firms by 63 percent, delivering proceeds of $59 billion in the first quarter.

"The U.S. stands out with the secondary markets having been large beneficiaries of this reflation trade over the last nine months. This has helped drive the Americas back to more normalized capital markets volumes,” said Frank McGee, chief operating officer, Global ECM at Credit Suisse.

London, Europe's biggest market for initial public offerings, bucked the global trend with equity listings at a five-year low. However, the proceeds from European IPOs were up 33 percent.

Russell Holden, corporate partner at international law firm Taylor Wessing, said he expected this to continue as companies waited for more favorable 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 (BX.N) warehousing business Logicor and Telefonica's (TEF.MC) 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 euros ($3.75 billion).

Goldman Sachs (GS.N) overtook JP Morgan (JPM.N) as the leading bank for equity capital markets globally in the first quarter, thanks to its mandates for follow-on offerings. JP Morgan kept the top spot for IPOs globally.

Representing more than a tenth of global follow-on proceeds, Italian bank UniCredit (CRDI.MI) had the biggest equity offering of the year so far, raising 13.8 billion euros and potentially generating hundreds of millions dollars in fees for banks.

Ed Sankey, EMEA Co-Head ECM and Global Head of Equity Syndicate at Deutsche Bank (DBKGn.DE), said merger and acquisition activity, subsidiary IPOs and privatizations by European governments would drive deal flow.

"There was a wave of IPO exits in 2013-15 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."

Editing by Jane Merriman, Greg Mahlich

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