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* British IPOs typically fall below offer price a year on
* U.S. stock market IPOs fare better, boosted by techs
* Global listings market in recovery phase
By Sinead Cruise and Kylie MacLellan
LONDON, Nov 4 (Reuters) - Investors wooed by 2013's strongBritish stock market listings forget the risks of backing debutshare sales at their peril, as data from the past decade showstheir support is rarely rewarded within a year of companiesgoing public.
Figures from private bank Kleinwort Benson show that onaverage UK listings underperformed the FTSE All Share index in the 12 months after debut in 7 of the last 10 years.
European flotations have proved only marginally better,lagging MSCI Europe in six years from 2003 to 2012.
Twelve-month performance is the first major milestonelong-term investors look at when considering the success orfailure of any single-stock investment.
Asset managers who invest cash for pension funds andinsurers are among the largest groupings of IPO buyers. Theytypically invest with a five-year-plus horizon but some of theirclients assess whether to put new money into funds on the12-month timeframe.
"It's tough to win in an IPO," Gene Salerno, KleinwortBenson equities head, said.
The privatisation of Britain's Royal Mail, nowtrading 70 percent above its offer price, was an anomaly in amarket dominated by entrepreneurs or private equity firms whopush for highest possible prices when they cash out, he said.
While most of 2013's European and UK listings were tradingabove offer price, performance is being buoyed by overall marketsentiment as well as company specifics, Salerno said.
INVESTORS DO BETTER IN U.S.
U.S. stock market flotations have fared better than those inBritain and Europe, with IPOs outperforming over the S&P 500index in six years during 2003-2012, Kleinwort says.
Klaus Hessberger, co-head of EMEA equity capital markets(ECM) at JP Morgan, said this was likely to be due to thegreater level of activity in the U.S. and because the market isdominated by technology listings, which often do well.
The larger pool of buyers and the trend for company ownersto sell small stakes on their market debut has also helped tocreate a livelier after-market and faster positive returns.
Sam Dean, co-head of global ECM at Barclays said: "It's a generalisation but...historically U.S. issuers have hada healthier attitude to IPOs, thinking of them more as an entryevent to the public markets rather than an exit event."
"That's one of several factors which contributed to theterrible IPO period Europe saw from 2009-2012. But lessons havebeen learned and there is a much better approach now from almostall participants," he said.
In Europe, fast-growing firms have put listing plans on icesince the 2008 financial crisis began, rather than sell stock ina bearish market. Many of those who did come to market werefirms running out of funding options as banks withdrew lending.
Kleinwort's data was weighted by market capitalisation,meaning some years were skewed by unusually large, weak floats.
In Britain, 2011's 30 percent IPO underperformance versusthe index was driven by the record $10 billion listing ofcommodities trader Glencore, now Glencore Xstrata.
Glencore accounted for about half of all capital raised fromlistings on the exchange's main market that year but it has nottraded above its 530 pence offer price since 2011.
This year's IPOs have so far fared better, with half of the10 biggest deals trading at least 10 percent above offer price.
Barclays' Dean said 2013 is feeling similar to 2003-2004,when IPO business had started to pick up after the dot-comcrash. The data showed these were two of the years that BritishIPO returns outperformed the index.
Bankers said vendors were pricing sales realistically,encouraging investors to respond favourably towards IPOs,carefully selecting which they will back and at what price.
But Jeff Morris, U.S. equities head at Standard LifeInvestments, warned that may not last. A dot-com style boomwould return one day, followed by a repeat of the overvaluedsales that preceded the crash, he said.
"Towards the end (of the tech boom), we saw stuff that wasso early stage it simply didn't belong in the public market andstuff that was so spurious you had to steer clear."
