2013年-CEPS欧洲政策研究中心_A_Survey_of_the_European_IPO_Market_94页_509kb

Summary of "A Survey of the European IPO Market"

Core Content

This survey provides an in-depth analysis of the European Initial Public Offering (IPO) market from 1995 to 2004, covering 15 European countries. It examines the institutional framework, IPO mechanisms, underpricing, long-term performance, and post-IPO liquidity across the region.

Main Points

1. European IPO Market Overview

• The European IPO market has shown significant developments, including the rise of "new economy" IPOs and the widespread adoption of the book-building mechanism.
• The market is characterised by cyclicality, with a peak during the late 1990s (internet bubble) and a decline post-2000.
• The introduction of the euro has influenced investors to consider European-wide strategies rather than national ones.

2. IPO Market Segmentation

• European stock exchanges typically offer three regulated market segments: Main Market, Parallel Market, and New Market.
• Some exchanges, such as the Stockholm, Vienna, and Warsaw stock exchanges, do not have a New Market, while others have since closed it.
• The London Stock Exchange (LSE) and Euronext Amsterdam do not have a specific segment for medium and small capitalisations, as their Main Markets accept all firms unless they exceed certain thresholds.

3. Listing Requirements

• Main Markets require:
  • Audited financial statements for at least three years
  • Minimum market capitalisation (varies by country)
  • Minimum public float (varies by country)
• Parallel Markets have lower requirements:
  • No or low minimum market capitalisation
  • Minimum public float of 10% to 25%
  • Typically require audited accounts for two years
• New Markets are for growth companies and have specific criteria:
  • Minimum capitalisation of EUR 2 million
  • Minimum existence of three years
  • Minimum public float of 20% to 25%
  • Minimum capital increase of 50% of the offered shares

4. IPO Mechanisms

• The three main IPO pricing mechanisms are:
  • Fixed-price offerings
  • Auctions
  • Book-building
• Book-building has become the most popular method in recent years.
• Investment banks play a central role in monitoring and controlling the IPO process, including initial pricing and allocation.
• The choice of IPO mechanism is influenced by factors such as market conditions, firm size, and investor demand.

5. IPO Underpricing and Performance

• The average initial underpricing across the pan-European sample is 22%.
• Short-term performance is generally consistent with known patterns, but there are country and sector discrepancies.
• Long-term performance is less clear, but significant underperformance is observed at the 3-year horizon in all countries except Greece and Portugal.

6. Post-IPO Liquidity

• The study supports the illiquidity-compensation hypothesis, which posits that initial underpricing is linked to information asymmetry.
• Higher turnover is observed immediately after the IPO, but no significant effect on trading volumes is found after the first year.
• This liquidity effect is attributed to the interest generated by underpriced stocks, not to ownership structure.

Key Information

• Sample Size: 2,104 domestic companies across 15 European countries.
• Time Period: 1995 to 2004.
• Data Sources: World Federation of Exchanges (WFE), FESE, and exchange-specific sources.
• Focus Areas:
  • Listing requirements across different markets
  • IPO pricing mechanisms and their usage
  • Short and long-term performance of IPOs
  • Relationship between underpricing and post-IPO liquidity

Structure of the Survey

1. I. The European institutional framework of IPOs

   • Current stock exchange listing process
   • Comparison of listing requirements across European exchanges

2. II. A comparison of IPO underpricing and long-run performance across European markets

   • Empirical analysis of IPO underpricing
   • Evaluation of IPO long-term performance
   • Theoretical explanations for underperformance

3. III. Initial underpricing, long-run performance and post-IPO liquidity

   • Previous research on IPO performance and liquidity
   • Empirical test of the relationship between performance and liquidity
   • Conclusion on the illiquidity-compensation hypothesis

Conclusion

The survey concludes that while there are common features in the European IPO market, national differences remain significant. The book-building mechanism has become dominant, and underpricing is a key factor in post-IPO liquidity. Despite the decline of growth markets since 2000, the European IPO market continues to be shaped by regulatory frameworks, institutional practices, and market dynamics.