European IPOs Outpace U.S (GS, BCS, ABX, ST, JPM)

Bloomberg reports that it is the first time after the stock market peak of 2007 that initial public offerings in Europe are outpacing the U.S. Brenntag AG and Kabel Deutschland Holding AG have raised almost double the amount of the biggest American deal.

According to data compiled by Bloomberg, Western European companies have raised $6.1 billion through IPOs in the first three months of 2010; this is 69% more than U.S. offerings. In 2009, U.S. IPOs had raised three times as much as European deals and banks from Goldman Sachs Group Inc. (NYSE: GS) to Barclays Plc (ADR) (NYSE: BCS) said the region would lag behind again this year. In this light, the European rebound is all the more noteworthy.

Tom Troubridge, the London-based head of the capital-markets group at PricewaterhouseCoopers, said, “The fact that Europe did better than the U.S. in the first quarter is encouraging for Europe - people were much less optimistic about it when the year started. Now that the macroeconomic situation has been better in Europe, markets here should be livelier than the U.S. throughout the year.” Alasdair Warren, Goldman Sachs’s London-based head of equity capital markets in Europe, said, “We could potentially see $50 to $70 billion raised in the IPO market in Europe this year. Which is staggering if you consider that less than $10 billion was raised last year.”

Kabel Deutschland of Germany, the country’s largest cable company, raised 759 million euros ($1.03 billion) on March 19. Brenntag, the Germany-based chemicals distributor, sold $1 billion a week later. African Barrick, a unit of Toronto-based Barrick Gold Corp. (NYSE: ABX), the world’s largest gold producer, raised $873 million in London on March 19. All three companies sold more than the biggest U.S. IPO this year, the $569 million offer of Boston- based Bain Capital LLC’s Sensata Technologies Holding NV (NYSE: ST).

In the light of a recovery in the European economy, which is estimated to have expanded at 0.7% in the first three months of 2010 after contracting in the previous five quarters, the Stoxx Europe 600 went up to an 18-month high in March. The fact that European leaders have taken steps to resolve Greece’s financial crisis, backing a Franco-German proposal for a mix of International Monetary Fund and bilateral loans to cut the region’s biggest budget deficit has also helped sentiments.

Viswas Raghavan, the London- based head of international capital markets at JPMorgan Chase & Co. (NYSE: JPM), this year’s biggest underwriter of European IPOs, said, “I would not have been this confident two months ago, but now the IPO market is back. There has been a torrent of deals in Europe and a lot is simmering in the pot.”