Bankers looking to float a raft of companies in Europe that were taken private in the last decade must now, in light of events in the region in recent days, inject a dose of reality into their pitches to clients.
The Greenspan put is no longer there to bail investors out.
In the region, more deals are being pulled, such as Belgian chemicals company Taminco, or cut in size, like Helikos, a special purpose acquisition vehicle. After some months of relative stability, volatility has sprung back in a flash. This may be the pattern to come. If so, valuations must now be aligned to reflect the deeply uncertain economic state in parts of the developed world.
Global conditions have gradually deteriorated since July 2007, and are now dominated by little projected capital expenditure investment, artificial demand, sputtering access to credit and unemployment rates at cyclical peaks.
Nevertheless, a window could open up for IPOs priced at a discount to early-cycle multiples and timed so as to bring carve-out deals to the market swiftly, filling the books overnight.
EMEA IPO SPOTLIGHT
The spotlight, inevitably, turns on companies that are expected to float their businesses by mid-year. Following British clothing retailer New Look’s £650 million IPO announcement Tuesday, the list of potential candidates includes: Spanish travel-reservations company Amadeus; Nordic care-home operator Ambea; U.K. online grocer Ocado; U.K. travel service Travelport; Danish telco TDC A/S; French care-home group Medica; and U.K. entertainment company Merlin Entertainments Group.
Disappointed by events over the last 48 hours? Spare a thought for private equity sponsors BC Partners, Blackstone Group and a string of others waiting in the wings to cash in on a sweet exit. Their payout depends on how much downside risk is embedded in the stock markets.
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