Translated material
Europe has caught up with America
The IPO boom caused an increase in the profits of their organizers from the Old World
European banks have practically caught up with their competitors from the United States in terms of the volume of profits raised in the process of conducting IPOs of various companies. At the same time, the total amount of money raised in Europe during initial public offerings since the beginning of this year was 78% more significant than in the United States. This trend has emerged in recent years, and, as analysts note, this indicates a general increase in the liquidity of the global securities market, as well as the fact that large investors are now not only in America.According to Bloomberg, for the first time since World War II, the traditional gap between the income of banks on the two continents has become barely noticeable: this year alone, Europe received more than $1.1 billion in commissions from IPOs, and the United States - about $1.4 billion. And This is despite the fact that American underwriters charge twice as much as their European counterparts when conducting stock placements on stock exchanges. At the end of 2005, the commission of underwriters from the United States amounted to $1.7 billion versus $966 million in Europe, and in 2002, American investment banks received five times more than European ones.
There have been $37.8 billion in IPOs in Europe this year, but just $21.2 billion in the United States. European banks are profiting from a flurry of share offerings by Russian banks, Norwegian oil and gas companies and British property developers. The influx will most likely continue this year, with representatives of various sectors planning to hold IPOs - from the Danish oil and gas company Dong Energy S/A to the construction holding of the PIK group of companies.
Non-US companies have been reluctant to list on US exchanges due to stricter disclosure requirements introduced by the Sarbanes-Oxley Act in 2002 and the 30% drop in the value of the dollar over the past five years. In addition, the remuneration of American underwriters on average since 2002 has been 6.7% of the placement volume versus 3.2% for European ones.
In this regard, more and more companies prefer the London Stock Exchange to the New York Stock Exchange. "The trend towards London remains the same," says Visvos Raghavan of JPMorgan Chase & Co. in London. “There is sufficient liquidity in our geographic area, without depending on the demand of American investors.”
“This is a consequence of the fact that global liquidity has generally increased,” notes Alexander Kochubey, head of the investment committee of Renaissance Investment Management. “It is obvious that now there are large investors not only in America, whereas previously liquidity and business transparency were only American priorities.” In addition, European markets have begun to catch up with America not only in liquidity, but also in quality indicators, he emphasizes. That is why the New York Stock Exchange is trying to buy up European markets.
According to Mr. Kochubey, this trend has been obvious over the past three years. The fact that people are starting to talk about this now is only a consequence of the fact that the volume and number of IPOs is growing.
“The slowdown in the American economy, in particular due to problems in the real estate sector, could also affect the current state of affairs,” continues Mr. Kochubey. “However, recent economic data indicate that the state of the United States is not so dire and it is too early to deprive it of the title of financial leader.”