PwC sees IPO freeze for the rest of 2011

A WORRYINGLY low number of companies are planning to list on Europe’s stock markets in the remaining months of this year as they abandon fundraising in the current bearish markets, PwC will warn today.

High volatility and low investor confidence have taken their toll on listings over the past quarter, with less than €1bn (£860m) raised in London and only four big privatisations in Spain and Poland holding up European markets.

With just six weeks to go until the start of the November window for flotations – one of two prime times of year that companies come to market – very few businesses have indicated they intend to go public.

“It takes the best part of four to six months for a company to properly prepare for an IPO, to get a prospectus out there,” PwC’s capital markets partner Mark Hughes told City A.M. “Based on our experience there are not a lot of projects being floated for the rest of this year.”

PwC’s head of capital markets, Richard Weaver, called the current stock markets “the most challenging IPO conditions in recent memory”.

“The next month or so is typically a peak period for IPOs as companies tap the markets for funds after the summer,” he said. “The prospects for 2011 look grim unless there is a sea-change in market sentiment.”

Slumps in stock prices make it hard for companies issuing shares to offer them at the right value, while the cheap prices of established companies mean investors are loath to take a risk on an untried investment.

The IPO pipeline is now bulging with listings that have been postponed until the first half of 2012, PwC said in its IPO Watch report. This could cause a huge bounceback in listings if markets improve next year – or hold back growth if they do not.