French rights issues and Middle East IPOs bring glimmer of joy

Data InsightECM Explorer 24 June

French rights issues and Middle East IPOs bring glimmer of joy

As the first half of the year comes to an end, EMEA’s equity capital markets show ample room for improvement. Europe, in particular, has suffered the most during the last tumultuous six months of 2022, Dealogic data shows.

EMEA issuance stood at just over USD 64bn as of June 22, according to Dealogic, its worst YTD numbers since 2000. For Europe, the data is even worse, with only USD 46.6bn of issuance so far in 1H, almost USD 20bn below any other equivalent period for the continent since 2000.

IPO deal value across EMEA is down 62% compared with YTD last year, an exceptional year for European new listings, but is up 229% on the same period in 2020. Middle Eastern deals drove the only upwards trend, having contributed with USD 13.96bn worth of issuance volume YTD, around 71% of all IPO deal value printed in EMEA.

The region was home to three of the top 10 largest global IPOs so far this year: the USD 6bn listing of Dubai Electric and Water Authority (DEWA) [DFM:DEWA] on the Dubai Financial Market, the USD 2bn IPO of plastics company Borouge [ADX: Borouge] on the Abu Dhabi Securities Exchange and USD 1.4bn Saudi listing of Nahdi Medical Company [TADAWUL: 4164] in March.

The three deals are, so far, the only USD 1bn-plus new listings in EMEA in 2022. “If things carry on the way they are going, the only sizeable listings this year will be in the Middle East,” said a senior ECM banker.

Alongside Middle Eastern issuance, French ECM has had a better half than other markets. ECM deals on French exchanges have represented 14.63% of EMEA deals so far this year, up from 8.26% YTD in 2021 and 6.23% over the same period in 2020. French issuance has been driven primarily by rights issues such as the huge EUR 3bn EDF [EPA:EDF] cash call priced in April, Air France-KLM’s [EPA:AF] EUR 2.25bn rights issue and a EUR 705m raise from Faurecia [EPA:EO], priced this week.

The French market is set to witness at least another sizeable rights issue this year in the form of a EUR 1.3bn operation scheduled for 4Q by ALD [EPA:ALD] for the acquisition of LeasePlan from a consortium led by TDR Capital, which will create a global player in mobility with a total combined fleet of around 3.5m vehicles, according to public statements.

“Rights issues are a little less sensitive to the market environment than other transactions and shares have time to adjust, you just need to build in more cushion on the transactions than you would in other times,” said a French ECM banker. “With Air France and EDF, they came with big discounts to help cushion greater volatility.”

Join the ECM Explorer next week for part 2 of our half-year round-up with the top bank performers in EMEA so far in 2022. Find out who has outperformed the rest of the class.

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