Jock Fistick/Bloomberg NewsA pedestrian passes a Ziggo store in Utrecht, the Netherlands.LONDON – Europe’s capital markets are showing signs of life.
Companies across the Continent raised a combined 2.3 billion euros ($3 billion) through initial public offerings in the first three months of the year, according to the consultancy PricewaterhouseCoopers.
That is a 155 percent increase over the final quarter of 2011, as companies look to take advantage of growing optimism in the European financial markets.
The jump in the total value of I.P.O.’s this year was helped when two companies, DKSH, a Swiss trade and marketing company, and Ziggo, a Dutch cable operator, raised a combined $2 billion through offerings in March.
Now, analysts expect other companies that had postponed floatations because of the financial crisis to attempt new listings in an effort to tap growing investor confidence.
“We are seeing a number of companies who were forced to shelve their I.P.O. plans last year making a comeback,” Richard Weaver, the head of capital markets at the consultancy PricewaterhouseCoopers, said in a statement. “The prospects for future I.P.O.’s have been boosted by the encouraging trading of a number of recent issuers, and renewed market stability.”
Much of the mounting optimism has been linked to the stability in Europe’s banking sector after the European Central Bank pumped in more than $1 trillion in short-term loans to help financial institutions.
The recovery, however, has a long way to go. While the combined value of European I.P.O.’s in the first three months of the year rose substantially compared with the final quarter of 2011, the total of 2.3 billion euros is still less than the 3 billion euros that companies raised in the first three months of 2011.
And ongoing concerns about the economies of the so-called euro zone may still create renewed uncertainty in the financial markets, which could make it more difficult for companies to go public.
Data released on Wednesday, for example, showed that the euro zone’s manufacturing and services sectors contracted for the second consecutive month in March. Unemployment across the Continent remains in the double digits, and debt levels, particularly in Southern European countries, have yet to be substantially reduced.
“We should not delude ourselves into a false sense of security. The recovery is still very fragile,” Christine Lagarde, managing director of the International Monetary Fund, said in a statement on Tuesday. “The financial system in Europe is still under heavy strain. Debt is still too high.”