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* 10 European deals in 2018 so far, raising
* Siemens Healthcare, Deutsche Bank fund arm in focus
* Investors wary after stock market falls in Jan/Feb
By Simon Jessop and Dasha Afanasieva
Ten IPOs have already hit stock markets in
A string of listings is expected to follow in the comingquarters. But in a sign of investor nervousness, Siemens'healthcare business - expected to be the biggestEuropean IPO this year and one of
"Investors are pushing back against aggressive valuationsand showing much more price sensitivity because they are fed upwith poor IPO after-market performance," a senior banker, whodid not want to be named, said.
This growing price sensitivity follows the burst offinancial market volatility in January and February in whichmajor stock markets - including the Euro STOXX 50 -fell 10 percent within a few days, fuelled by inflation fearsand expectations that interest rates could rise more quickly.
"The number of potential IPOs has basically accelerated,again. There's a lot in the pipeline," Ed Meier, fund manager atOld Mutual Global Investors, said.
"But I think it's fair to say that, given where we are inthe (economic) cycle, the amount of potential outcomes in(company) forecasts, and the potential for those forecasts to bewrong, is much higher than it was."
When deciding whether to invest in an IPO, fund managersassess a company's growth forecasts in its IPO prospectus. Theseform the basis for its valuation or price tag. If the outlookfor economic growth turns downwards, these growth forecasts willbe at risk.
Global investors cut their equity exposure to a three-monthlow after stock markets fell sharply early inFebruary.
But the IPO pipeline remains fully stocked with companieslining up to take advantage of still attractive stock marketvaluations.
In
On the London Stock Exchange there are a number of companiesaiming to list, which could help the exchange sustain lastyear's strong recovery in IPO volumes after a slump in 2016partly due to
Private equity-backed tech firm Avast, online bettingcompany SkyBet and education firm GEMs are lining up to list in
But companies' ability to raise their target amounts ofmoney is set to get tougher.
"Money will get tighter ... there are some things that aregoing to be markedly more difficult to do," Adam Young, globalhead of equity advisory at Rothschild, said.
Nick Burchett, head of
"We've seen a few over the last few months where we'velooked at them and thought... some of the valuations are alittle bit rich. Is it the advisers that are just saying 'we canget it away for this. There's a bit of money sloshing around inthe system'?"
The risk of over-paying has been highlighted by severalhigh-profile IPO flops, including Austrian bank Bawag,the country's biggest ever listing, which fell in value on itsfirst trading day. Bawag's shares are currentlytrading at around
Another to underwhelm was Angry Birds maker Rovio, which issued a profit warning just months after itsIPO in September, leaving investors nursing big losses.
Young from Rothshild said: "Poor post-IPO after marketssometimes occur because sellers have over-ambitious valuationtargets and push offer prices beyond the levels which thehighest quality investors wish to support."
"And sometimes IPOs are the victims of genuine bad luck andthe side-effects of other issuers' mistakes," Young added.
Whether 2018 becomes a record year for IPOs could depend inlarge part on where and if
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(Additional reporting by Ben Martin in
