| Corporate finance sees upsurge in 2014, with more promised for 2015 |
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| With latest figures showing European IPO activity reaching levels last seen in 2007 and professional services firms reporting strong activity in their transaction and M&A practices in the Finance Dublin Accountancy Survey, 2014 has been a bumper year for corporate finance activity. |
IPO activity across the first 11 months of 2014 has seen an 84 per cent increase in amount of capital raised compared to the same period in 2013.
IPOs included Avolon’s launch on December 12th, and Dalata Hotel Group, operator of the Maldron hotels amongst others, which raised €265m in March, valuing the company at €305m, Ireland’s largest. In private equity, DCC revisited the US private equity market, raising $750 m. in March (see DCC group treasurer, Niall Kelly’s Deal Focus article on page 12).
Figures from PwC's IPO Watch show European IPO activity, up to the end of November 2014, at €48.8bn, with the full year figure expected to break through €50bn, surpassing the 2013 total of €26.5bn. The largest IPO in Europe was financial services firm Pershing Square Holdings Ltd which raised €2.15bn listing on Euronext, while retailer AA plc (London Stock Exchange, €1.73bn); insurer NN Group NV (Euronext, €1.54bn); financial services firm Rocket Internet AG (Deutsche Bourse, €1.4bn) and retailer B&M European Value Retail SA (London Stock Exchange, €1.34bn) were the other top five European IPOs. However, the large jump in the value of European IPOs in 2014 does not tell the whole story as an extremely strong first half of the year was followed by a less than spectacular second half of the year which saw a string of IPOs pulled due to poor performance of some newly-listed stocks and a sharp rise in volatility at the end of Q3.
While this had the effect of diminishing an even larger IPO total for 2014, it will have the effect of impacting the 2015 market, if conditions remain favourable.
Looking to the global M&A market, Goldman Sachs, a bellwether for global M&A activity, has become the first bank since 2007 to be mandated on deals worth over $1 trillion in a year. The bank’s standout European deal was the $40 billion merger of Swiss building materials company Holcim and French rival Lafarge. The deal received approval from the EU in December. CRH is expected to be amongst the bidders for the assets.
A survey by Mergermarket shows the optimism amongst European executives for M&A activity in 2015. According to the second edition of Mergermarket's European M&A Outlook, 76 oer cent of the 225 executives surveyed say they expect dealmaking will increase or increase greatly, a 28 per centage point increase from the previous survey.
The top three buy-side drivers in Europe were forecast in the survey to be: consolidation (57%), increased appetite from foreign acquirers (56%), and cash-rich corporate acquirers (55%).
The top three sell side drivers are expected to be: capital raising for expansion in faster growing areas (67%), distress driven M&A (59%) and non-core asset sales from larger companies (56%). |
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