German IPO mood still positive

Deutsche Börse IPO sentiment indicator suggests new listings to be expected from March onward

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Investor sentiment toward IPOs held steady in the first quarter of the year in Germany, even while it declined elsewhere, as volatility of equities decreased and share prices rose, according to Deutsche Börse’s IPO sentiment indicator.

The indicator, which measures conditions for IPOs in Frankfurt, Germany, hovered at 32.43 points for the first quarter of 2013, similar to the 32.8 points registered in the fourth quarter of last year, according to a press release by the indicator’s creators. The indicator is up from 29.23 points a year ago and 31.18 in August 2012.

‘In contrast to global IPO activities, market participants in Frankfurt see a favorable period for placing shares and expect a positive price level for them in the coming months,’ notes the release.

‘The lower volatility and higher valuation of equities is also having a positive effect on the primary market.’ The survey shows that IPOs are primarily to be expected from March, Deutsche Börse adds.

In January, expected price volatility for blue chip shares on the DAX Index dropped to 13 percent for a 30-day period, from 16 percent in October last year and 40 percent a year ago, according to the report authors.

In the same time period, the DAX increased to more than 7,700 from about 7,400.  Higher share prices and lower volatility increases the chances of success of an IPO and is a major factor in boosting the indicator, says Deutsche Börse.

The last three months witnessed IPOs from two companies on the Frankfurt Stock Exchange, including Chinese textile maker Firstextile and telecommunications company Telefónica Deutschland Holding. Telefónica Deutschland alone raised €1.5 bn ($2 bn).

The highest-profile IPO in the previous three-month period was Talanx, Germany’s third-biggest insurer, which raised almost €500 mn. The Talanx IPO was launched on October 2, 2012 after a period of hesitation in which the company announced, then cancelled, then reannounced its IPO plans.

The Deutsche Börse IPO sentiment indicator, created by the Center for Entrepreneurial and Financial Studies at the Technical University of Munich together with Deutsche Börse, is designed to reflect the sentiment of investors, companies and underwriters on the primary market in Frankfurt.