Europe's bourses try to stem IPO flight to US

Stability may boost appeal of its markets

- CHARLIE CONCHIE

Two of Europe's major stock exchange operators are stepping up efforts to retain local initial public offerings in the face of US competition, with marketing and research challenging the perception that New York-listed companies fetch higher valuations.

Stock exchanges in Europe and the UK have been hit by a drought of IPOs over the past two years and a number of local firms choosing to float or move primary listings to the US for its deeper pools of capital and potentially higher valuations.

Deutsche Boerse, which operates the Frankfurt Stock Exchange, is warning of sluggish post-IPO performance, higher costs and the threat of litigation for firms that list in the US, according to a document shared with German companies and IPO advisers in recent weeks, and Reuters.

It found that about two-thirds of companies that listed in Europe, including Germany, rose on their first day of trading, while only about half of European companies that listed in the US gained on their market debuts.

Over time the IPOs from the region also fared better in Europe than in the United States.

The data doesn’t mention valuation at IPO, but the exchange highlighted in its report several examples of European-listed companies trading at a premium to US-listed peers.