Conference Magazine - GoingPublic.de - Deutsches Eigenkapitalforum

Equity Markets
Figure 2: Market conditions have recently turned more supportive for IPOs
Development of volatility and valuation levels since 2011
Valuation
NTM P/E MSCI
Europe (x)
Volatility and IPO
Pricings
starting with traditional marketing (i.e. investor education
typically starts 4 weeks ahead of targeted pricing) should
be retained for as long as possible. Elements to provide for
such timing flexibility include early investor traction as discussed
above, longer pre-marketing phases followed by a
short book building exercise, regular and honest timing and
indicative pricing updates by the banks for the sellers and
issuers, as well as scheduling around key macro events and
potentially competing equity issuance.
Potentially smaller initial free floats to optimise
exit value
In adopting a model pioneered and successfully executed
by a vast number of US IPOs, floating an initially smaller
free float of below 25% followed by opportunistic block
%
55
45
35
25
15
V2X Index
Last twelve months
Proposal to Write-down 50%
of Greek Debt and Increase
EFSF to 1 Trn
Resurfacing Greek
Concerns
Greek Elections
Average: 27.4%
EU Summit
Oct-11 Dec-11 Feb-12 Apr-12 May-12 Jul-12 Sep-12 Oct-12
VStoxx Average
Source: Bloomberg
14
12
10
8
Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12
55
40
25
10
Source: Morgan Stanley
Greek debt concerns
and disappointing
macro data
Priced IPO Pulled IPO
Figure 3: Volatility retreated since peak in june
Page 30 Deutsches Eigenkapitalforum 2012
Uncertainties around global
growth and sovereign debt
21.9%
Average: 10.1x
Re-opening of
IPO markets
Renewed
Macro
Concerns
Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12
sell-downs over time has repeatedly proven to deliver an
optimised exit valuation and to mitigate the valuation
disequilibrium. Exchanges and investors have become less
vigilant with minimum free float requirements in light of
application rules, index inclusion and aftermarket liquidity;
the IPO is viewed as tool to set a valuation benchmark, but
leaves sufficient value upside for both investors and sellers
once the company has delivered on their results and established
a credible track record. Ziggo’s IPO, floated at a share
price of EUR 18.50 followed by a block sell-down at EUR
23.50 and a further sell-down at EUR 24.75 four and seven
months post-IPO, respectively, has set a successful European
precedent for such a staggered path to exit. Talanx’s
initial free float of approx. 10% is also underlining this trend.
Managing the public perception
“Draghi Put”
and QE3
As witnessed in some of the recent prominent and globally
commented IPOs, the “public voice” has become an
increasingly critical factor with growing influence over the
fate of the IPO. Rumours started or exacerbated by the
press surrounding self-dictated timing deadlines, minimum
valuation thresholds or listing locations have become an
often counter-productive swing factor impacting upon
investors’ behaviour; indeed, in several cases, they have
left behind the secluded shores of the newspapers’ finance
sections to head towards a much broader and polemic
media coverage.
It almost seems as if some major global IPOs face the risk of
“getting ahead of themselves”, with the public opinion push-