Why are fewer European companies listing?
Brexit uncertainty, US-China trade dispute and slowing economy leaves number of firms going public at ten-year low
The number of European companies going public has fallen to its lowest level since the immediate aftermath of the financial crisis, as uncertainty over Brexit, the ongoing US-China trade war and slowing global economy contributes to a ‘watch-and-wait’ approach.
Refinitiv data shows proceeds from European listings dipped to $292 million in the first three months of 2019, compared to $13.9 billion made in the same period a year ago.
In all, just two companies have listed on the London Stock Exchange, Europe’s biggest, so far this year, in contrast to just a few months earlier.
Uncertainty around Brexit, the impact of a global trade war instigated by the Trump administration and concern about the state of the global economy has left many firms who had planned to go public in 2019 holding back and waiting to see if conditions improve.
“Bankers say some companies are put off because they cannot achieve top valuations that were available up to a year ago” reports Reuters, while “those without the appetite to go public with their shares are instead looking to private stake sales and cash injections, previously favoured among tech start-ups”.
It comes as Bloomberg reports that “european dealmaking is on course for its worst first quarter since the height of the credit crisis”.
Unless something dramatic happens by the end of the week, Europe is on track to have the worst quarter for mergers and acquisitions since 2013, “when unemployment and austerity plans were causing protests and countries were asking the European Union to bail out their banks”, says the financial news service.
It is a different story in the US where, despite growing concern the economy could be overheating, growth remains strong and “investors have shown strong appetite for new stock listings”, reports the BBC.
In a show of faith in the current state of the US stock market, Uber will list its shares on the New York Stock Exchange in what is expected to be the biggest initial public offering of the year.
The US ride-hailing company is expected to make its paperwork public as soon as April for a listing that bankers and investors think could value it at more than $100bn.
The Financial Times says Uber’s IPO “is one of a number of hotly anticipated Silicon Valley listings expected in the coming months”. Its smaller US rival Lyft plans to list its shares on Nasdaq next week.