Author: Laurence Neville
F&C;’s Adrian Fowler
Adrian Fowler, head of the European institutional investment team at F&C; Asset Management in London, says that the 20% performance of European stock markets in 2005 is unlikely to be matched in 2006. But up to 10% is achievable due to the weight of money coming into the market, an expected stream of M&A; activity and improved corporate earnings.
That should drive an increase in issuance levels. One of the first large deals expected to come to market in the first quarter of 2006 is French electronics company Legrand, which will raise E2.1 billion and has BNP Paribas, JPMorgan, Lehman Brothers and Morgan Stanley as bookrunners. In common with many of the deals expected in 2006, Legrand’s IPO will be a partial exit for private equity houses Kohlberg Kravis Roberts and Wendel Investissements.
Another partly private equity-owned company, UK-based defense research company QinetiQ, is also likely to try to float in the first quarter. It is currently 31% owned by US house Carlyle Group and 56% owned by the UK’s Ministry of Defence. The company, which acquired two American defense technology companies last year, could raise up to £500 million, valuing it at £1.1 billion.
Third-generation mobile phone network 3 Italia, owned by Hong Kong conglomerate Hutchison Whampoa, is expected to float in Italy before March. It postponed its E1.8 billion-E2.5 billion flotation in November because of regulatory problems. French company Aéroports de Paris (ADP) could also sell a E1 billion IPO in the first quarter, according to bankers.