Equity Primary Markets and Trading Report

Transcription

1 3Q 218 Equity Primary Markets and Trading Report European market data update

2 Equity turnover (value) M&A Equity Underwriting Key highlights 1-3Q 218 YtD variation of European Equity activity (EU28 member countries and Switzerland) Total IPOs Follow-ons Convertibles Total: announced Total: completed Domestic (completed) Outbound (completed) Inbound (completed) Total Main markets MTFs Market Cap ( ) -42% -47% -49% -44% -12% -1% -14% -6% 3% 5% 12%.7% 31% -6% -5% -4% -3% -2% -1% % 1% 2% 3% 4% Equity underwriting on European exchanges accumulated a total of 1.2 bn in proceeds in the first three quarters 218, a 42% decrease from the value originated in the same period of 217 ( bn). IPO issuance in 218 year-to-date (YtD) decreased by 12% against the amount issued in the first three quarters of 217. Completed Mergers and Acquisitions (M&A) of European companies totalled bn in 218YtD, a decrease of 1% from the amount completed in the first three quarters of 217 ( 764. bn). The amount of announced M&A deals totalled bn in 218YtD, a 31% increase from the same period of 217. During 3Q18, two large megadeals were announced (Petrohawk Energy BP and Wind Tre SpA and CK Hutchison). Equity trading activity on European main markets and MTFs generated a total of 8.9 tn in turnover value in 218YtD, an increase of 3% from 217YtD ( 8.7tn) Domestic market capitalisation of European listed shares stood at 13.5 tn at the end of 3Q18, an increase of.7% from the market value at the end of 4Q17 ( 13.4 tn) Source: Dealogic, ECB, FESE, Datastream, WFE, CBOE Global Markets and local exchanges Equity Primary Markets and Trading Report Q

3 Contents Issuance 4 Mergers & Acquisitions 1 Secondary Markets 16 Valuations 23 Appendix 26 Equity Primary Markets and Trading Report Q

4 Issuance Equity Primary Markets and Trading Report Q

5 Year-to-date decline in Equity issuance Equity Issuance on European exchanges (EUR bn) Convertible securities IPOs Follow-ons Q 17 2Q17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18 Latest 7 Quarters The 42% YtD decline in equity underwriting was driven by a 47% YtD decrease in follow-on offerings IPO proceeds decreased 12% from the value raised in 217YtD with fewer deals (18 IPOs in 218YtD and 198 in 217YtD) Source: Dealogic Equity Primary Markets and Trading Report Q

6 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18 Follow-on offerings (EUR bn) IPO proceeds (EUR bn) IPO proceeds by industry (Top 1, EUR bn): YtD IPO proceeds by listing market (EUR bn): YtD Computers & Electronics Finance Real Estate/Property Forestry & Paper Oil & Gas Transportation Healthcare Food & Beverage Closed End Funds Professional Services Deutsche Borse LSE SIX Swiss NASDAQ OMX EURONEXT Borsa Italiana Madrid SE Warsaw SE Bulgaria SE ISE Bucharest SE Spotlight Stock Market Athens SE CEESEG Source: Dealogic *Finance includes SPVs Equity Primary Markets and Trading Report Q

7 Equity issuance by exchange during the year Equity underwriting on European exchanges: IPO, follow-ons and convertibles (EUR bn): YtD LSE Deutsche Borse EURONEXT NADAQ OMX SIX Swiss Borsa Italiana Madrid SE Warsaw SE ISE Luxembourg SE CEESEG Spotlight Stock Market Athens SE Bucharest SE TSX Venture Exchange Bulgarian SE ICAP By exchanges, the LSE (main market and AIM) led by total equity underwriting accumulating a total of 32.8bn, followed by the Deutsche Börse and Euronext exchanges Source: Dealogic Equity Primary Markets and Trading Report Q

8 Equity issuance on Junior markets Equity underwriting on Junior European markets (EUR bn) Follow-on IPOs Convertibles SMEs decreased in 5% YtD the total amount of equity raised on European Junior exchanges, accumulating a total of 8.6bn in proceeds in the first three quarters of 218 and following a declining trend in equity raising over the last 4 quarters Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Latest 7 Quarters IPOs on Junior markets totalled.3 bn in proceeds in 3Q18, the lowest quarterly amount since 3Q16 Source: Dealogic Equity Primary Markets and Trading Report Q

9 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 1Q 14 2Q 14 3Q 14 4Q 14 1Q 15 2Q 15 3Q 15 4Q 15 1Q 16 2Q 16 3Q 16 4Q 16 1Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18 IPO proceeds on Jr markets decelerated after strong start of the year IPO proceeds on Jr European markets (EUR bn) IPO proceeds on Jr markets by exchange (EUR mm, YtD) AIM AIM Italia 1, , NASDAQ First North Frankfurt -Scale Alternext ISE-Enterprise Securities Market Warsaw New Connect IPO proceeds on Jr markets by industry (Top 1, EUR mm, YtD) Number of IPOs on European exchanges by market value of issuer (pre-deal value, YtD) Finance Computers & Electronics Real Estate/Property Professional Services Chemicals Retail Telecommunications Healthcare Transportation Agribusiness ,691.9 < 1m 1m- 2m 2m- 1bn + 1bn N/A Q Q Source: Dealogic *Finance includes SPVs Equity Primary Markets and Trading Report Q

10 Mergers and Acquisitions (M&A) Equity Primary Markets and Trading Report Q

11 M&A by acquiring party Completed M&A by acquiring party (EUR bn) 1,2 1, European inbound European outbound European domestic Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Latest 7 Quarters European M&A activity in 218YtD decreased 1% against the same period of last year, driven by a 44% YtD decline in inbound M&A. APAC firms represented 4% of the inbound deal value Domestic M&A activity (i.e. between European firms*) increased 12% against 217YtD, accumulating a total of 384.9bn in deal value ( 342.5bn in 217YtD) Outbound M&A (i.e. European firms that acquired non-european firms) decreased 14% against 217YtD. American-targeted firms represented 81% of the outbound deal value *EU28 and Switzerland Source: Dealogic Equity Primary Markets and Trading Report Q

12 M&A by type of deal Completed M&A by type of deal (EUR bn) 1,2 1, Add-on Sponsor Strategic Q 17 2Q 17 3Q 17 4Q 17 1Q 18 2Q 18 3Q 18 Latest 7 Quarters By type of deals, Private Equity-backed M&A activity ( Sponsor deals) was the largest contributor to the year-to-date decline of -14% against 217YtD Source: Dealogic Equity Primary Markets and Trading Report Q

13 Top 1 industries for completed M&A (YtD, EUR bn) Completed M&A transactions by deal value (EURbn) Less than 1m 1m to 5m 5m to 1bn 1bn to 1bn Chemicals Real Estate/Property Healthcare Computers & Electronics Transportation Utility & Energy Telecommunications Oil & Gas Finance Food & Beverage Pharma lead by deal value. Dynamic Megadeals Q-3Q 218 1Q-3Q Eleven megadeals were completed during 218YtD, which included one split: Bayer-Monsanto Atlantia-Abertis infraestructuras Unibail/Rodamco-Westfield Worldpay Group plc-vantiv GlaxoSmithKline-Novartis Melrose Industries-GKN Sanofi- Bioverativ Inc TDC A/S by a group of pension funds XL Group-AXA Wind Tre CK Hutchison Atlas Copco AB split into Epiroc AB with full control to existing shareholders These deals represented in total 162.5bn, or 28% of the amount of completed M&A transactions in the first three quarters of the year Over Source: Dealogic Equity Primary Markets and Trading Report Q

14 3Q18 decline in announced M&A anticipates decrease in completed M&A in next quarters Announced M&A (EUR bn) Q Q2 215 Q Q Q Q Q Q Q1 217 Q2 217 Q3 217 Q Q Q2 Q3 Withdrawn M&A (EUR bn) Q1 215 Q Q3 215 Q Q Q Q Q Q Q Q Q Q Q2 Q3 Completed inbound M&A by acquiring region (EUR bn, YtD) Completed outbound M&A by target region (EUR bn, YtD) Source: Dealogic Equity Primary Markets and Trading Report Q

15 Acquiror Nationality European integration: M&A between European firms Completed intra-european M&A activity (YtD, EUR bn) Target Nationality AT BE BG HR CY CZ DK EE FI FR DE EL HU IE IT LV LT LU MT NL PL PT RO SK SI ES SE CHE UK Total Austria ,721 4,623 Belgium , ,321 Bulgaria Croatia Cyprus Czech Republic 88 2, ,899 Denmark 36 2, , ,4 24,77 Estonia Finland 278 7,71 4, ,287 France 4,588 6,623 28,221 2,459 4, 1, ,58 7,337 59,384 Germany 7, ,713 3, ,164 1, ,829 Greece 2 1, ,237 Hungary Ireland ,967 3,42 Italy 8 1, , , ,1 Latvia Lithuania Luxembourg , ,681 Malta Netherlands , ,637 Poland , , ,26 Portugal ,87 6 1,123 Romania ,295 Slovak Republic 3 3 Slovenia Spain ,71 1,415 35,298 Sw eden 1, , ,787 Sw itzerland 9 4 4, , ,47 1,11 13,561 United Kingdom ,896 1, , ,267 98,434 Total 8,371 5, ,426 28, ,72 42,154 42,839 1,915 3,836 6,133 17, ,989 3,686 1, ,137 21,294 8,935 16,3 384,916 Source: Dealogic. Cross-national activity above 1bn highlighted in dark green Equity Primary Markets and Trading Report Q

16 Secondary markets Equity Primary Markets and Trading Report Q

17 26Q2 27Q2 28Q2 29Q2 21Q2 211Q2 212Q2 213Q2 214Q2 215Q2 216Q2 217Q2 218Q2 Sep- Sep-1 Sep-2 Sep-3 Sep-4 Sep-5 Sep-6 Sep-7 Sep-8 Sep-9 Sep-1 Sep-11 Sep-12 EUR tn Market capitalisation of domestic listed shares Euro area EU 28 Market capitalisation of listed shares finalised 1H18 at 13.5tn,.7% above the level reached at the end of 4Q17 ( 13.4bn) % GDP 1% 8% 6% 4% 2% EU 28 Euro Area (EU 19) Europe % Source: ECB, Datastream, FESE, NASDAQ OMX, LSEG, WFE, FESE, CEESEG, Bucharest SE, WSE Equity Primary Markets and Trading Report Q

18 Feb-14 Jul-14 Dec-14 May-15 Oct-15 Aug-16 Number of listed companies on European exchanges Warsaw Stock Exchange Bratislava Stock Exchange CEESEG - Prague Bulgarian Stock Exchange Zagreb Malta Stock Exchange NASDAQ Nordics & Baltics LSEG Bucharest Stock Exchange Ljubljana Stock Exchange Luxembourg Stock Exchange SIX Swiss Exchange CEESEG - Vienna Irish Stock Exchange BME (Spanish Exchanges) CEESEG - Budapest Euronext Cyprus Stock Exchange NASDAQ Baltics Athens Exchange Deutsche Börse Source: FESE, WFE and European exchanges. Listed companies excludes Vienna s global segment and Spanish SICAVs Equity Primary Markets and Trading Report Q

19 Mar-1 Sep-1 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 3Q 21 1Q 211 3Q 211 1Q 212 3Q 212 1Q 213 3Q 213 1Q 214 3Q 214 1Q 215 3Q 215 1Q 216 3Q 216 1Q 217 3Q 217 1Q 218 3Q 218 Sep-9 Mar-1 Sep-1 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Dec-12 Mar-13 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Daily turnover value on European exchanges and MTFs (EUR bn)* Number of listed companies on European exchanges 8,4 8,2 8, 7,8 7,6 7,4 7,2 Monthly turnover value on exchanges and MTFs (EUR bn)* Turnover ratio (annualised turnover value/ market cap) Exchanges MTFs 16% 14% 12% 1% 8% 6% Source: Cboe Global Markets, FESE, WFE, ECB and local exchanges. Listed companies excludes Vienna s global segment and Spanish SICAVs *market represents order book transactions Equity Primary Markets and Trading Report Q

20 MiFID dark trading caps Number of equity-like instruments suspended from dark trading at the EU or venue level Number of equity-like instruments whose DVC suspensions were revoked at the EU or venue level EU level (8% cap) TV level (4% cap) Mar Apr May Jun Jul Aug Sep Oct 8 EU level 1 TV level Apr May Jun Jul Aug Sep Oct Source: ESMA On 7 March 218, ESMA published the double volume cap (DVC) data files specifying the securities that surpassed the MiFID II limits of dark trading on EU venues From a Universe of 26,69 equitylike securities traded in the EU, 652 are currently suspended (as of October 218) from dark trading either on specific EU venues (14 securities) or on all EU venues (548) after surpassing the MiFID II dark trading thresholds (4% dark traded in a given trading venue and 8% for suspension at EU level). The number of banned instruments has decreased during the year from 755 in March 218 after c7 instruments completed its 6-month suspension period started in March Equity Primary Markets and Trading Report Q

21 MiFID dark trading caps Number of equity-like instruments in the ESMA DVC files by ISIN location: Source: ESMA Country ISIN Universe Suspended EU level Suspended TV level Suspended (% Universe) AT % BE % BG 313 % CY % CZ 11 % DE % DK % EE 21 % ES % FI % FR % GB % GR 233 % HR 131 % HU 48 % IE % IT % LT 34 % LU % LV 27 % MT 34 % NL % PL 831 % PT 64 % RO 367 % SE % SI 128 % SK 53 % Non-EU % Total % The 652 instruments suspended from dark trading at the EU or trading venue level represents 2% of the Universe of equity-like instruments on ESMA s DVC files (26,69) By countries, 167 of the 652 suspended instruments have UK ISINs (i.e. UK as the issuing country), which represents 9% of the 1,925 UK ISINs registered in the ESMA DVC files 18 of the suspended instruments have non-eu ISINs, or 43% of all suspended instruments at the EU and trading venue. Equity Primary Markets and Trading Report Q

22 Average weekly trade count Jun-15 Dec-15 Jun-16 Dec-16 1% 8% 6% 4% 2% % Increase in dark trading after c7 DVC shares completed its 6-month suspension period Dark trading as % of total turnover* Number of equity-like instruments (ISINs) registered on ESMA s DVC files 25,699 25,83 26,37 26,76 26,632 26,879 27,183 27,285 26,69 Jan Feb Mar Apr May Jun Jul Aug Sep 2% 15% 1% 5% % of dark trading by indices* FTSE 1 CAC 4 DAX AEX IBEX 35 FTSE 25 Block trades: weekly trade count by large-in-scale (LIS) limit Q 17 1Q 18 2Q 18 3Q 18 % LIS Limit ( ) Source: ESMA, Cboe Global Markets and Fidessa *market represents order book transactions Equity Primary Markets and Trading Report Q

23 Billions Block trades Block trades: weekly turnover on European selected venues Proportion of dark traded as LIS blocks (%) The average weekly turnover in the form of block trades on selected European venues* has increased from 3. bn in 1Q17 to 5.6 bn on average during 3Q18. According to Fidessa data, the percentage of dark traded as large-in-scale (LIS) blocks on selected venues* declined from c5% in 2Q18 to 32% in the last week of 3Q18. The recent decline in dark traded as LIS blocks could be attributed to the completion of the 6-month DVC suspension for c7 instruments * Venues include CBOE dark, CBOE BXE, CBOE LIS, Liquidnet, Posit, Turquoise Plato, and UBS MTF Source: Fidessa Equity Primary Markets and Trading Report Q

24 United Kingdom Block trades: weekly trade count by listing market France Sweden Germany Ireland Italy Denmark Spain Netherlands Austria Finland Belgium Portugal Norway Czech Republic Greece Hungary Switzerland Source: Fidessa with data from Cboe BXE and CXE Dark Order Books, Cboe LIS service, Turquoise Plato, Liquidnet, Posit and UBS MTF The share universe for the report is taken from the ESMA Shares admitted to trading on EU Regulated Markets register. Equity Primary Markets and Trading Report Q

25 Valuations Equity Primary Markets and Trading Report Q

26 Price indices and valuation multiples Price indices of selected stock exchanges (31 Dec 217 = 1) DAX 3 FTSE 1 NIKKEI 225 S&P 5 IBEX 35 CAC 4 Price-to-book ratio of Stoxx 6 constituent shares and EU average EU (Reuters Composite) STOXX EUROPE The average European priceto-book ratio (for STOXX Europe 6 indexed shares) finalised the first half of the year at 1.76x, only 3bps below the level at the end of 4Q17 (1.79x) Source: Datastream Equity Primary Markets and Trading Report Q

27 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Mar-13 Valuation ratios and implied volatility Price-to-earnings (PE) ratio Dividend payout ratio (Dividends/ Earnings per share) IBEX 35 CAC 4 DAX IBEX 35 CAC 4 DAX 3 2 Dividend yield ratio (Dividend/Price) FTSE 35 DAX 3 IBEX 35 CAC 4 STOXX EUROPE Implied volatility of Euro Stoxx 5 constituent shares (VSTOXX) Source: Datastream and Stoxx Equity Primary Markets and Trading Report Q

28 Appendix 1Q 18 2Q 18 3Q 18 4Q FY 1Q 17 2Q 17 3Q 17 4Q FY % Change YoY % Change YtD Equity underwriting ( bn) % -42% IPOs % -12% Follow-on offerings % -47% Convertible securities % -49% Mergers and Acquisitions ( bn): completed % -1% European outbound % -14% European inbound % -44% Intra European % 12% Mergers and Acquisitions ( bn): announced % 31% Equity turnover value ( tn) % 3% Main Markets % 5% MTFs % -6% Market Capitalisation of domestic listed shares ( tn) European (EU28 and Switzerland) %.7% EU %.9% Euro Zone %.9% Source: Dealogic, ECB, FESE, WFE, Cboe Global Markets and local exchanges Equity Primary Markets and Trading Report Q

29 Contacts Disclaimer and Methodology Research Julio Suarez Associate Director, Research +44 () Equities, ECM and Corporate Finance April Day Managing Director, Head of Equities +44 () Andrew Brooke Director, ECM and Corporate Finance Andrew. +44 () Sean Barwick Manager, Equities +44 () () Your receipt of this document is subject to paragraphs 3, 4, 5, 9, 1, 11 and 13 of the Terms of Use which are applicable to AFME s website (available at and, for the purposes of such Terms of Use, this document shall be considered a Material (regardless of whether you have received or accessed it via AFME s website or otherwise). AFME is registered on the EU Transparency Register, registration number For a description of the methodology of this report please visit London Office 39th Floor 25 Canada Square London E14 5LQ United Kingdom +44 () Brussels Office Rue de la Loi, Brussels Belgium +32 () Frankfurt Office Skyper Villa Taunusanlage Frankfurt am Main Germany +49 () Follow AFME on Association for Financial Markets in Europe