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UK IPO Outlook Survey: 2011 IPO Market is Stabilising but May Lose Momentum in the Second Half of the Year
added: 2011-07-14

The UK IPO market in 2011 is shaping up to be stronger than 2010, but may lose momentum entering the second half of the year, according to a new survey of UK transaction lawyers conducted by Merrill Corporation.

“Widespread financial issues in the European Union have negatively affected the IPO market in the UK to date,” said Ed Bifulk, president of the Merrill DataSite virtual data room business at Merrill. “As lawyers look ahead to a resolution of European debt issues, they believe that their own markets will stabilize but will remain slow in comparison to their U.S. and Chinese counterparts.”

Merrill Corporation, provider of Merrill DataSite, the leading virtual data room (VDR) solution for business communication and information management, conducted an in-depth survey of approximately 60 global securities lawyers who advise companies listing on major global exchanges. According to the results of the independent survey, 70 percent agree that the UK IPO market in 2011 will be flat or slightly weaker when compared to 2010, while 67 percent think the second half of the year will be flat or weaker when compared with the first half.

Despite the potential slowing of the UK IPO market in the second half of the year, the survey respondents think that improvements in the IPO market will be driven by an improving economy (28%), resolution of EU debt issues (27%) and investor demand for IPOs (18%).

“We are seeing a stabilising of the IPO markets in 2011 as we anticipate resolution of the credit crisis in Europe,” said Daniel Bushner, partner, Jones Day. “There is a lot of pent-up demand from investors for new issuances and companies are looking to leverage more favorable valuations and better market conditions.”

Survey respondents (72%) expect a gloomier 2011 UK IPO market than in the U.S. but slightly stronger than in China (and Hong Kong); U.S. securities lawyers think their local IPO markets will remain at par or get stronger when compared with 2010, at 80 percent.

Building on the stabilising of the UK IPO market, foreign countries are still looking to access British capital markets and list on major exchanges in addition to, or in lieu of, listing on their home exchanges, according to 80 percent of participants. Lawyers anticipate listings coming from China, Russia and the U.S.

“We expect that foreign companies will continue to list on UK exchanges due to the more clearly defined listing rules and regulations, and the perceived stability of UK markets,” said Phillip Broke, partner, White & Case LLP.

Lawyers surveyed anticipate natural resources (35%), mining (20%), oil and gas (15%), technology (15%) and infrastructure (10%) will drive IPO issuances for the remainder of 2011. Those surveyed unanimously agree that Glencore was the most anticipated IPO of 2011.

Source: Business Wire

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