IPO market set for best year since 2007
While corporate partners continue to protest about the lack of large mandates this year, when it comes to the IPO market, conditions are undoubtedly looking up – for now. The London Stock Exchange has had the best year to date for UK company floats since 2007, with nine flotations to date totalling $4.5bn (£2.86bn), according to Dealogic.
This time last year there had been just one float, raising $48m (£31m).
Stock market volatility remains an issue, with deal lawyers including Norton Rose Fulbright equity capital markets (ECM) partner Mark Lloyd Williams – who advised on the February float of house builder Crest Nicholson Holdings (£553m) – referring to conditions as ‘choppy’ and indicating that the position is kept under review from week to week.
However, the success of these IPOs – and many others including insurance group esure and UK real estate agency Countrywide – is raising confidence, and private equity houses are once again considering a float as a viable way to exit their investments.
Mark Bergman, head of the global capital markets and securities practice group at US firm Paul, Weiss, Rifkind, Wharton & Garrison observed: ‘The psychology of the market is important. When there’s positive psychology it creates a good market.’
The £1.2bn float in March of esure – best known for Michael Winner’s advertising punchline: ‘Calm down, dear, it’s just a commercial’ – saw Slaughter and May, led by corporate partners John Papanichola and Jonathan Marks, advise the company on UK law and Davis Polk & Wardwell, led by head of the European financial institutions group Jeffrey Oakes, advise on US aspects of the deal.
Oakes said: ‘The transaction was well accepted and priced at the middle of the range. It was viewed as a successful transaction.’
The float enabled insurance tycoon Peter Wood to sell over a third of his stake, netting around £175m, and Penta Capital to recover its investment from backing Wood in his 2010 management buy-out from Lloyds Banking Group.
Slaughters also advised UK estate agency Countrywide Holdings on its IPO in March led by corporate partner Jeff Twentyman working as an integrated team with Paul Weiss. Sullivan & Cromwell advised the banks including Goldman Sachs, Jefferies and Credit Suisse.
Nilufer von Bismarck (pictured), head of ECM at Slaughters, said: ‘The market has been extremely good. There’s more confidence and it feels like things are coming to fruition.’
Meanwhile, the float in June of Partnership Assurance Group enabled Cinven Partners to capitalise on its €200m 2008 investment in the annuity provider, advised by longstanding counsel Freshfields Bruckhaus Deringer, led by corporate partners Mark Austin and Adrian Maguire.
Despite this run of success (and market research carried out by broking and advisory house Peel Hunt which indicates that the majority of IPOs are trading above their offer price), nervousness prevails and partners say that deals are still taking a long time to come to market. The signs are good but this is all about the long game.
LONDON STOCK EXCHANGE LISTED IPOS 2013
| Pricing date | Total value including non-deal | Issuer name | General industry | Bookrunner parent | Issuer adviser | Manager adviser |
|---|---|---|---|---|---|---|
| 22 March | $1,052m | esure Group plc | Insurance | Deutsche Bank | Slaughter and May Davis Polk & Wardwell (London) |
Herbert Smith Freehills |
| 17 May | $885m | Platform Acquisition Holdings Ltd | Finance | Barclays Citi |
Greenberg Traurig Ogier & Le Masurier |
Herbert Smith Freehills |
| 7 June | $743m | Partnership Assurance Group plc | Insurance | Bank of America Merrill Lynch Morgan Stanley |
Freshfields Bruckhaus Deringer | |
| 22 March | $394m | Greencoat UK Wind plc | Finance | RBC Capital Markets Barclays |
Norton Rose | Ashurst |
| 13 February | $387m | Crest Nicholson Holdings plc | Construction | Barclays HSBC |
Norton Rose | Clifford Chance |
| 26 March | $343m | HellermanTyton Group plc | Technology | Goldman Sachs J.P. Morgan |
||
| 19 March | $338m | Countrywide plc | Real estate | Goldman Sachs Jeffries Credit Suisse |
Slaughter and May Paul, Weiss, Rifkind Wharton & Garrison |
Sullivan & Cromwell |
| 6 March | $227m | TwentyFour Income Fund Ltd | Real estate | Numis Securities | ||
| 15 May | $107m | GCP Student Living plc | Real estate | Cenkos Securities plc |
Sullivan & Cromwell