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London’s main market has hosted Euro 15.2bn in IPOs so far this year, many by companies based outside Europe, and is on course to beat 2005’s record of Euro 19bn, says PricewaterhouseCoopers. Last year was the first in which London raised more money for its debutants than the mighty New York Stock Exchange, which saw Euro 17bn of floats. New placings on the NYSE have raised Euro 13.3bn in the first three-quarters of this year.
The statistics will make grim reading for John Thain, head of the NYSE, who last week complained that the US was losing its competitive edge. Wall Street has become concerned that foreign businesses are increasingly unwilling to accept the expensive disclosure rules imposed on US-listed companies by the Sarbanes-Oxley law, which was introduced in the wake of Enron and other major accounting frauds.
In particular, Sarbanes-Oxley is thought to have deterred Russian companies from seeking listings in America. Instead, the former Soviet Union has become a major hunting-ground for the LSE, which recently hosted this year's biggest float, a Euro 5.2bn placing by Rosneft, the Russian oil company. ‘Offering value in London has been boosted by Rosneft and Standard Life,’ said Tom Troubridge, head of PWC’s capital markets group. ‘The fourth quarter has also started well, with Aer Lingus and Experian making their London debuts.’
PWC’s figures also shed an interesting light on the wave of consolidation sweeping equities and derivatives exchanges around the world. The LSE, a regular target for would-be bidders, is expected to see a takeover approach from Nasdaq, the second largest US equity trading platform, which has amassed a 25% stake in the London market. However, last week LSE chief executive Clara Furse announced a doubling of interim profits to £77m and insisted: ‘We are not for sale. These results show we have no need to sell.’
Meanwhile, the NYSE is pursuing a $20bn merger with Paris-based Euro-next, which has seen a dramatic decline in its fortunes as a host for new equity floats this year, according to PWC. Euronext has hosted just Euro 4.6bn worth of new IPOs in the first nine months of this year, against a performance of Euro 16bn for the whole of 2005, although last year it was busiest in the fourth quarter.
Nasdaq, traditionally a venue for technology companies, has raised Euro 8.9bn for its new entrants so far this year. AIM, the market for smaller companies which is owned by the LSE, has hosted placings for 182 firms this year, raising Euro 4bn. In Frankfurt, Deutsche Borse has also seen about Euro 4bn worth of new floats in the first three-quarters of 2006.