BusinessCorporate FinanceIPOs head for Europe as Sarbox hits US markets

IPOs head for Europe as Sarbox hits US markets

Europe raises more new funds from initial public offerings than the US for the first time in four years

The true cost of the Sarbanes-Oxley Act for the capital markets in the US has
emerged, as Europe raised more new funds from initial public offerings than the
US for the first time in four years.

In its latest review of the European IPO market, the capital markets team at
PricewaterhouseCoopers found that both the volume and value of European IPOs had
grown substantially in 2005 and outstripped the US exchanges.

The number of IPOs in Europe last year grew 39% from 433 to 603 and the sums
of new money raised almost doubled from 28bn euros (£19.3bn) to 51bn euros as
international companies flooded into the European markets to avoid the onerous
regulatory requirements imposed on the US exchanges by Sarbanes-Oxley.

Tom Troubridge, the head of PwC’s London capital markets group, said that it
was apparent from the IPO statistics that Sarbanes-Oxley was having an impact on
the decisions of international companies planning to list.

‘It is apparent from the performance of the IPO market in 2005 that the
Sarbanes-Oxley Act has influenced the decisions of many non-US companies.
Companies that seemed reluctant to subject themselves to the increased
regulation in the US and opted instead to head to IPO in Europe,’ said
Troubridge.

Comparing the performance of flotations the US markets with those in Europe
showed that the European exchanges attracted 126 international IPOs raising
¤9.6bn (£6.6bn) in 2005, compared with the 23 international IPOs in the US,
which raising just ¤3bn (£2bn).

The strong appetite for flexible regulation was further underscored by the
strong performance of the London Stock Exchange’s lightly regulated AIM market.

AIM alone, which admitted 519 new companies last year, accounted for more
than half (52%) of the European total IPOs in 2005. Its performance helped
London to claim the number one slot for offering value and IPO numbers.

Such was the success of the AIM regulatory model that other major exchanges
in Europe, including Euronext and Deutsche Börse, opened up similar junior
markets to capitalise on the strong demand for light regulation.

The creation of these new exchanges and the strong performance of the IPO
market in 2005 could prove to be equally buoyant for flotations this year,
Troubridge said.

‘With the continued need for capital from emerging market economies such as
Russia, China and India, Europe should continue to be a popular destination for
international IPOs,’ Troubridge said.

COMPANY REPORTS

FTSE 100
Listed accountancy vendor Sage is to make an offer to acquire
Oslo-based business software vendor Visma for around £334m. The proposed offer,
subject to the completion of due diligence, is recommended by Visma’s board of
directors. Visma is the largest Scandinavian vendor of business management
solutions for small and medium-sized firms,with revenues of around £166m last
year.

Xstrata CFO Trevor Reid has scooped more than £1m after exercising share
options in the mining company. Reid exercised 75,000 shares at £18.18, from the
original figure of £3.60. He makes a profit of £1.09m. The payout is the latest
by a high profile FD. Colin Day, CFO of Reckitt Benckiser, recently sold 200,000
shares for a pre-tax profit of £2.2m.

FTSE 250
Mark Allan, chief financial officer of Unite Group, has made £414,000 after
selling shares obtained through the exercise of options. Allan sold more than
140,000 ordinary shares at 425p each after being granted the options at 129p. He
has more than 85,000 shares in the company, which provides student housing and
property management services.

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