Goldman Sachs tops tables for European IPOs

Research by Capital DATA for The Wall Street Journal Europe puts the investment bank in first place in terms of value of stock brought to market but ranks it tenth in terms of stock performance.

The Wall Street Journal Europe and Capital DATA, a research firm that tracks equity issuance, conducted research into European IPO activity in 2000 and have come up with some interesting results.

The newspaper reports the findings today which put Goldman Sachs Group in first place among Europe’s top 10 IPO firms for the amount of stock it brought to market. The US-based investment bank raised E7.21bn ($6.91bn) of equity capital for clients via IPOs in Europe. The research findings show however that these deals then sank by an average of 22 per cent by the end of the year, putting Goldmans tenth in terms of performance. Performance is calculated from the IPO price through to the end of the year.

The bank was quick to justify this lower ranking and the newspaper quotes a Goldman Sachs spokesman who said: “Nasdaq is off 50% from its highs of last year, and as one of the largest underwriters of tech and telecom, our performance has been affected by the weakness in this sector…Secondly, many of our tech deals were done in the first quarter,” when the demand for such shares was at its peak.

The survey results are based on all European IPOs in which the ranked firms acted as bookrunner. Follow-on offerings were excluded from the list because the shares already trade and investors can therefore more clearly influence the pricing.

Dresdner Kleinwort Benson headed the league tables of the same 10 firms in terms of performance. Its average IPO rose 30 per cent, enhanced by three Neuer Markt deals that doubled and, in one case, tripled in price, according to Capital DATA. The investmnent bank however is ninth by the value of IPOs brought to market at $1.1 bn.

The research findings show that Credit Suisse First Boston, led the greatest number of IPOs and ranked fourth in the amount of money raised at $4.4 bn. Its IPOs performed third-best with an average gain of 7.6 per cent.

The newspaper adds though that many regard the simple averaging of deal performance, which is the system used by Capital DATA, as being too simplistic to gauge true performance. Some say that the size of each transaction should be taken into account to show the value that is either created or destroyed following an IPO.

If this were the case, Merrill Lynch told the newspaper that it comes out on top with a weighted-average gain of 5.8 per cent, rather than a fall of 7.7 per cent under the simple-average system. Deutsche Bank would end up with a weighted-average gain of 5 per cent rather than a fall of 15 per cent.

European IPOs totalled a record $47.1 billion last year, a 44 per cent jump over 1999, and were dominated by issues from the TMT sectors [technology, media and telecoms].