Equity Primary Markets and Trading Report

Transcription

1 2Q 218 Equity Primary Markets and Trading Report European market data update

2 Equity turnover (value) M&A Equity Underwriting Key highlights 1H 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 ( ) -6% -39% -48% -44% -1% -8% -.2% 4% 7% 19% 28% 35% 45% -8% -6% -4% -2% % 2% 4% 6% Equity underwriting on European exchanges accumulated a total of 78.8 bn in proceeds in the first half of 218, a 39% decrease from the value originated in 1H17 ( 129. bn). Notwithstanding the year-to-date decline, IPO issuance in 1H18 increased by 19% against the amount issued in the first half of 217. Completed Mergers and Acquisitions (M&A) of European companies totalled 496. bn in 1H18, a decrease of 1% from 1H17 ( bn). This included large megadeals such as Bayer-Monsanto, which represented 12% of the total deal value ( 59.1bn). The amount of announced M&A deals totalled bn, a 45% increase from 1H17. This includes large megadeals such as Takeda Pharmaceutical -Shire plc ( 65bn) and Walt Disney-Sky ( 3bn). Equity trading activity on European main markets and MTFs generated a total of 6.2 tn in turnover value in 1H18, an increase of 4% from 1H17 ( 6.tn) Domestic market capitalisation of European listed shares stood at 13.3 tn at the end of 1H18, a decrease of.2% 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 Latest 6 Quarters The 39% YtD decline in equity underwriting was largely driven by a 48% YtD decrease in follow-on offerings Proceeds from IPO originations during the first half of the year increased 19% from the value raised in 1H17, although with fewer deals (138 IPOs in 1H18 and 147 in 1H17) Source: Dealogic Equity Primary Markets and Trading Report Q

6 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 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 Follow-on offerings (EUR bn) IPO proceeds (EUR bn) IPO proceeds by industry (Top 1, EUR bn): 1H18 IPO proceeds by listing market (EUR bn): 1H18 Computers & Electronics Finance Real Estate/Property Oil & Gas Transportation Healthcare Food & Beverage Closed End Funds Professional Services Construction/Building Deutsche Borse LSE NASDAQ OMX Euronext Borsa Italiana SIX Swiss Madrid SE Warsaw SE Sofia SE Irish SE Bucharest SE-BVB Spotlight Stock Market Prague SE 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): 1H18 LSE Deutsche Borse Euronext NASDAQ OMX SIX Swiss Madrid SE Borsa Italiana Warsaw SE Irish SE Vienna SE Athens SE By exchanges, the LSE (main market and AIM) led by total equity underwriting accumulating a total of 23.7bn, followed by the Deutsche Börse and Euronext exchanges Bucharest SE - BVB.1 Sofia SE.4 ICAP.3 SIX Swiss.3 Prague SE.2 Spotlight Stock Market 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 Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Latest 6 Quarters SMEs increased in 43% YtD the total amount of equity raised on European Junior exchanges, accumulating a total of 6.7bn in proceeds in 1H18 IPOs on Junior markets totalled 3.4 bn in proceeds in 1H18, the strongest first half of the year since 1H7 Source: Dealogic Equity Primary Markets and Trading Report Q

9 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 Strongest start of the year in IPO proceeds on Jr markets since 27 IPO proceeds on Jr European markets (EUR bn) IPO proceeds on Jr markets by exchange (EUR mm) 2.5 London AIM 2, NASDAQ First North Euronext -Alternext AIM Italia ISE Frankfurt Scale ASX All Markets 7.4 Warsaw SE-New Connect 2. IPO proceeds on Jr markets by industry (Top 1, EUR mm) Number of IPOs on European exchanges by market value of issuer (pre-deal value) Finance Computers & Electronics Real Estate/Property Professional Services Chemicals Telecommunications Retail Agribusiness Transportation Healthcare ,631.9 < 1m 1m- 2m 2m- 1bn + 1bn N/A H 218 1H 217 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 Latest 6 Quarters European M&A activity in 1H18 decreased 1% against 1H17, driven by a 6% YtD decline in inbound M&A particularly from a lower amount of inbound deals from APAC companies targeting European companies Domestic M&A activity (i.e. between European firms*) increased 28% against 1H17, accumulating a total of 282.9bn in deal value ( 22.9bn in 1H17) Outbound M&A (i.e. European firms that acquired non-european firms) increased 35% against 1H17. 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 Latest 6 Quarters By type of deals, Private Equity-backed M&A activity ( Sponsor deals) was the largest contributor to the yearto-date decline of -23% against 1H17 Strategic deals (i.e. between companies not backed by PE firms) only partially offset the decline in completed M&A activity, with an increase of 4% YtD in deal value Source: Dealogic Equity Primary Markets and Trading Report Q

13 Top 1 industries for completed M&A (EUR bn) Completed M&A transactions by deal value (EURbn) 1m to 5m 5m to 1bn 1bn to 1bn Chemicals Real Estate/Property Healthcare Transportation Computers & Electronics Utility & Energy Oil & Gas Telecommunications Machinery Finance Pharma lead by deal value. Dynamic Megadeals Less than 1m 1H 218 1H Nine megadeals were completed during 1H18, 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 Atlas Copco AB split into Epiroc AB with full control to existing shareholders These deals represented in total 162.5bn, or 33% of the amount of completed M&A transactions in 1H18 Over Source: Dealogic Equity Primary Markets and Trading Report Q

14 49% YoY increase in announced M&A anticipates major increase in completed M&A in next quarters Announced M&A (EUR bn) Withdrawn M&A (EUR bn) Q Q2 215 Q Q Q Q Q Q Q1 217 Q2 217 Q3 217 Q Q1 Q Q1 215 Q Q3 215 Q Q Q Q Q Q Q Q Q Q1 Q2 Completed inbound M&A by acquiring region (EUR bn): 1H 18 Completed outbound M&A by target region (EUR bn): 1H 18 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 (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 ,3 Belgium , ,716 Bulgaria Croatia Cyprus Czech Republic 9 9 Denmark 18, , ,418 Estonia Finland 13 5,214 3, ,93 France 4,392 6,623 23, , ,862 5,279 48,595 Germany 5, ,561 14, ,838 Greece 2 1, ,126 Hungary Ireland Italy 36 1, , , ,494 Latvia Lithuania Luxembourg , ,667 Malta Netherlands , ,478 Poland , , ,551 Portugal Romania Slovak Republic 3 3 Slovenia Spain , ,51 Sw eden , ,263 Sw itzerland 9 4 3, ,91 3, ,129 United Kingdom , ,431 7,376 Total 5,89 5, ,294 25, ,849 35,27 24,388 1, ,747 12, ,552 2, ,61 15,135 6,131 69, ,949 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 26Q1 27Q1 28Q1 29Q1 21Q1 211Q1 212Q1 213Q1 214Q1 215Q1 216Q1 217Q1 218Q1 Jun- Jun-1 Jun-2 Jun-3 Jun-4 Jun-5 Jun-6 Jun-7 Jun-8 Jun-9 Jun-1 Jun-11 Jun-12 EUR tn % GDP 1% 8% 6% Market capitalisation of domestic listed shares Euro area EU 28 Market capitalisation of listed shares finalised 1H18 at 13.3tn,.2% below the level reached at the end of 4Q17 but 2% above the level of 2Q17 ( 13.1bn) 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 Nov-13 Apr-14 Sep-14 Feb-15 Jul-15 May-16 Oct-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 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 2Q 211 4Q 211 2Q 212 4Q 212 2Q 213 4Q 213 2Q 214 4Q 214 2Q 215 4Q 215 2Q 216 4Q 216 2Q 217 4Q 217 2Q 218 Jun-9 Dec-9 Jun-1 Dec-1 Jun-11 Dec-11 Jun-12 Dec-12 Dec-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-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) Source: ESMA 797 TV level (4% cap) Mar Apr May Jun Jul EU level 1 1 TV level Apr May Jun Jul 11 2 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 The files are updated on a monthly basis based on trading activity on EU venues for all equity-like instruments in the EU during a 12- month rolling period From a Universe of 23,15 equitylike securities traded in the EU, 1,24 are currently suspended (as of July 218) from dark trading either on specific EU venues (69 securities) or on all EU venues (955) 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 increased during the year from 755 in March 218 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: June-18 Source: ESMA Country ISIN Universe Suspended EU level Suspended TV level Suspended (% Universe) AT % BE % BG 333 % CY % CZ 1 % DE % DK % EE 2 1 5% ES % FI % FR % GB % GR 235 % HR 131 % HU 46 % IE % IT % LT % LU % LV % MT 33 % NL % PL 832 % PT % RO 357 % SE % SI 129 % SK 53 % Non-EU % Total % The total of 1,24 instruments suspended from dark trading at the EU or trading venue level represents 4% of the Universe of equity-like instruments on ESMA s DVC files (23,15) By countries, 378 of the 1,24 suspended instruments have UK ISINs (i.e. UK as the issuing country), which represents 25% of the 1,493 UK ISINs registered in the ESMA DVC files 43% of the Danish ISINs (75 of 176 equity-like instruments with Danish ISIN) are currently suspended from dark trading either at the EU or trading venue level 18 of the suspended instruments (out of 13,488 instruments) have non- EU ISINs. Equity Primary Markets and Trading Report Q

22 Dec-9 Jun-1 Dec-1 Jun-11 Dec-11 Jun-12 Dec-12 Average weekly trade count Mar-15 Sep-15 Mar-16 Sep-16 1% 8% 6% 4% 2% % Decline in dark trading post-publication of ESMA s Double Volume Cap (DVC) data Dark trading as % of total turnover* Number of equity-like instruments (ISINs) registered in ESMA s DVC files 23,791 23,541 23,638 23,762 23,527 23,15 Jan Feb Mar Apr May Jun 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 3Q 17 4Q 17 1Q 18 2Q 18 % LIS Limit ( ) Source: ESMA, Cboe Global Markets and Fidessa *market represents order book transactions Equity Primary Markets and Trading Report Q

23 Jul-18 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 bn in 1H18 (reaching a maximum weekly average of 7bn in May 218). According to Fidessa data, the proportion of dark traded as block trades (i.e. percentage of dark traded as LIS Blocks on selected venues*) increased to 29% in the first weeks of January (just after MiFID II went live), later in March to 45% just after ESMA published the first double volume cap (DVC) data files, and most recently reaching 48% in mid-july The proportion of dark traded as block trades was 12% at the beginning of 217 * 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 Block trades: weekly trade count by listing market United Kingdom France Sweden Germany 2 15 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 Price indices of selected European stock exchanges declined between 6% (DAX-3) and 1% (FTSE1 and CAC-4) during 1H18 compared to the levels at the end 4Q17. The average European price-tobook ratio (for STOXX Europe 6 indexed shares) finalised the first half of the year at 1.74x, 5bps below the level at the end of 4Q17 (1.79x) Source: Datastream Equity Primary Markets and Trading Report Q

27 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 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 Dividend yield ratio (Dividend/Price) FTSE 35 DAX 3 IBEX 35 CAC 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) % -39% IPOs % 19% Follow-on offerings % -48% Convertible securities % -44% Mergers and Acquisitions ( bn): completed % -1% European outbound % 35% European inbound % -6% Intra European % 28% Mergers and Acquisitions ( bn): announced % 45% Equity turnover value ( tn) % 4% Main Markets % 7% MTFs % -8% Market Capitalisation of domestic listed shares ( tn) European (EU28 and Switzerland) % -.2% EU % 1% Euro Zone % 1% 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