Sunday 20th April 2014
flextrade
BlackRock has been awarded its first Renminbi Qualified Foreign Institutional Investor (RQFII) licence by the China Securities Regulatory Commission (CSRC) - An index joint venture between FTSE Group and Canada’s TMX Group has acquired the indices business of MTS, a European electronic fixed income trading business owned by the London Stock Exchange - The European leveraged finance market is set to undergo a shift this year, as private equity sponsors veer back towards loans to finance leveraged buyouts, says S&P Capital IQ - Turkish corporates are the most exposed among EMEA emerging markets to a scenario of slowing growth, rising interest rates and a persistently weak local currency, according to Fitch Ratings - London-based Global Markets Exchange Group (GMEX) is in talks to acquire an equity stake in ALTX Africa Group, a new exchange operator focusing on East Africa - Alternative asset managers with expertise in high-yield fixed income and distressed assets are upping their investments in the peer-to-peer loan market, according to a new report from Cerulli Associates.

Blog

Corporate Review

By Partners at BDO

Disappointing economic news balanced by rising FTSE and the first IPO of the year

Thursday, 26 January 2012 Written by 
Disappointing economic news balanced by rising FTSE and the first IPO of the yearI am sure that I am not the only one surprised by the performance of the equity market so far this year. The FTSE 100 has risen some 3.5%, despite the backdrop of continuing economic gloom, both at home and abroad.http://www.ftseglobalmarkets.com/

I am sure that I am not the only one surprised by the performance of the equity market so far this year. The FTSE 100 has risen some 3.5%, despite the backdrop of continuing economic gloom, both at home and abroad.

This week we received the disappointing news that the UK economy contracted by 0.2% in the last quarter of 2011, thus delivering us a net growth rate for the year of 0.9%. What’s more, forecasts for 2012 have come down in recent months on the back of the continuing turmoil in the Eurozone.

While the recent actions of the ECB have brought some liquidity back to the markets, the Eurozone is far from being out of the woods. Greece’s ongoing negotiations with its creditors regarding the extent of the haircut they might receive, increased speculation surrounding a potential Portuguese default, and the recent decision by the credit rating agency Standard & Poor’s to strip France of its triple A credit rating have all served to increase uncertainty in the Eurozone.

In light of this, it makes the sight of equity markets being so far up in 2012 all the more suspect. However, it remains too early to tell whether their recent gains are laid upon firm foundations or are simply market hype.

On the IPO front, the first Main Market IPO of the year has just taken off, with Ruspetro, the Russian oil & gas explorer, successfully raising $250m, albeit at the bottom of its price range.  However, the nature of Ruspetro’s launch was interesting - the company took the decision to launch via a one day book build after a period of test marketing, rather than the more traditional two week road show, which experience last year demonstrated can torpedo a float if the market dives during the two weeks. So, in my opinion, we should take our hats off to Ruspetro’s underwriters, Merrill Lynch, Rencap and Mirabaud for their novel and inventive approach to the float during these times of economic uncertainty.  However, it remains to be seen whether other companies will adopt this approach.

Nevertheless, let’s hope other companies will be tempted back to the IPO market before too long.

Chris Searle

Chris Searle is a partner in the Capital Markets team at BDO where he specialises in advising companies seeking to list on the Main Market or AIM and in undertaking pre-acquisition due diligence on M&A transactions. He also leads the firm's corporate finance technical and prospectus committees and is chairman of the technical committee of the ICAEW's Corporate Finance Faculty.

Website: www.bdo.co.uk

Related News

Related Articles

Related Blogs

Related Videos