European record for IPOs in 2015 but volatile markets likely to hinder activity in first half of 2016 - PwC

61 IPOs were postponed or withdrawn in 2015 (compared to 49 in 2014), 44 of which were due to market conditions.

Richard Spilsbury, Capital Markets partner, PwC in Scotland, said: “There’s no doubt that the oil market rout of the past 18 months not only shocked financial markets but caught many market participants off-guard. And it’s this longevity of low oil prices, combined with factors such as over-supply and challenging economic conditions that have continued to weigh heavily on equity markets and IPO issuances across the oil and gas industry.

“Generally, I would expect to see the number of companies coming to market to marginally decline, as investors continue to scrutinise investment opportunities and those that can wait, will wait. However for those companies with good management teams and good equity stories, opportunities can be found.

“Across the oil and gas industry specifically, any new equity issues are more likely to come from rights issues for companies that are experiencing distress. For those looking to raise equity within an IPO,especially if they want to replace existing shareholders, the process is likely to be incredibly difficult.

“For the oil and gas industry IPO market, 2016 is shaping up to be a bit of a mixed bag, but of course this could all change markedly with a sustained upward shift in oil price or the emergence of mega deals that are deemed ‘too good to miss’.”

•European IPOs finished 2015 on a high with total annual proceeds up 16 per cent (to €57.4bn) and average offering value* up 27 per cent (to €248m) year on year

•London IPO proceeds decreased by 16% as the London market was impacted by general election fears, Chinese contagion and tumbling oil prices

•PwC’s London outlook remains cautious and less optimistic than this time last year, with overall proceeds expected to fall in 2016

•Oil & gas - New equity issues more likely to come from rights issues for companies that are experiencing distress

Mark Hughes, Capital Markets partner at PwC, added: “As the curtains closed on 2015, it was really the giant IPOs of Aena, ABN AMRO and Worldpay, all raising €3bn plus and with good after market performance, which made headlines. These larger IPOs will continue to be a dominant feature in 2016’s London IPO market, with Clydesdale Bank the first bigger listing of this year.

“Looking ahead, 2016 will feature companies demonstrating strong and predictable growth stories with more focus than ever before on the longer term outlook.

“The technology and financials sectors will be strongly evident, but the IPO market will have to overcome the adversity of rock bottom oil prices, increasing interest rates and continued exchange rate volatility. While I remain optimistic about UK growth, we are living in complicated times and it remains to be seen if the market can recover from its current bout of indigestion.”