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European Stock Markets Witness Record Exodus of Companies

Strategic Insights

— 2 min read

A record number of companies have left European stock markets this year, totaling a staggering $20 billion ( £16 billion) exodus. This trend marks a significant shift, with the value of public-to-private deals surpassing the money raised by new listings. In the UK, $10 billion of equity disappeared from the stock market, more than double the $4.5 billion that came in from new listings. Shareholders' growing doubts about the efficiency of public ownership for many companies are likely a major factor in this trend.

Key Takeaways:

  • The number of public-to-private deals across Europe reached a record 96, with a total value of $20 billion, significantly surpassing the $10.5 billion in 2002 and $19 billion in 1999.
  • The UK saw the largest public-to-private deals, with Debenhams being acquired by a private equity consortium for $2.7 billion and Celanese being purchased by Blackstone for $2 billion.
  • The Canary Wharf property group is subject to a $2.7 billion offer from Morgan Stanley, highlighting the trend of companies being taken private.
  • Investment bankers attribute the rise to low equity valuations and low interest rates, making public-to-private acquisitions more affordable.
  • Marcus Agius, chairman of Lazard, noted that 2003 was an unusual year with many transactions being "opportunistic" due to private equity players having cash reserves and equity prices being lower.
  • Shareholder ire in the UK has led to a record level of "no" votes on directors' appointment and remuneration packages, hastening the pace of public-to-private deals.
  • Mark Currie, partner at KPMG's Private Equity Group, believes that Europe remains an untapped market for private equity, despite extensive coverage in the past five years.

Statistics:

  • 96 public-to-private deals across Europe, totaling $20 billion
  • UK public-to-private deals: 10 billion of equity disappeared, compared to $4.5 billion from new listings
  • Largest public-to-private deals in the UK: Debenhams ($2.7 billion) and Celanese ($2 billion)
  • Canary Wharf property group subject to a $2.7 billion offer from Morgan Stanley
  • Investment banker attribute the rise to low equity valuations and low interest rates
  • Shareholder "no" votes: a record level in the UK

Sources:

  • "A record number of companies have left European stock markets this year in a $20bn ( £16bn) exodus" (The Times)
  • Dealogic, a research company, provided data on the number and value of public-to-private deals
  • Lazard chairman Marcus Agius' quote: "The private equity players were cashed up and the equity prices were lower, Money was as cheap as it had been in a generation and the trade buyers were not active."
  • KPMG's Private Equity Group partner Mark Currie's statement: "Europe remains an untapped market"

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