1 Feb 2019

Equity Primary Markets and Trading Report Q4 2018

AFME is pleased to circulate its Equity Primary Markets and Trading Report for the fourth quarter of 2018 (4Q 2018).

The report provides an update on the performance of the equity market in Europe in areas such as primary issuance, Mergers and Acquisitions (M&A), trading, and valuations. 

Key highlights:

  • Equity underwriting on European exchanges accumulated a total of €123.2 bn in proceeds in 2018, a 42% decrease from the value originated in 2017 (€211.6 bn).

    IPO issuance in 2018 decreased 15% against the amount issued in 2017. The 2018 market uncertainty generated a sharp increase in the number of European IPOs withdrawn or postponed. 51 IPO deals were withdrawn or delayed in 2018, an increase from 20 in 2017— also the highest number since 2008 
  • Completed Mergers and Acquisitions (M&A) of European companies  totalled €1,042 bn in 2018, an increase of 11% from the amount completed in 2017 (€937.6 bn).

    The amount of announced M&A deals totalled  €1,078.7 bn in 2018, a 23% increase from 2017.

    APAC firms represented 28% of the inbound deal value, a sharp decline compared to 47% of the 2017 inbound deal value

    Valuation multiples stood roughly above 2006-18 averages. The median Enterprise Value to EBITDA ratio (EV/EBITDA) of targeted firms stood at 12.5x in 2018, compared to an annual average of 11.2x in 2006-18. 
  • Equity trading activity on European main markets and MTFs generated a total of €11.9 tn in turnover value in 2018, an increase of 4% from 2017 (€11.4 tn)
  • Update on MiFID II dark trading caps:
    • In March 2018, ESMA published the double volume cap (DVC) data files specifying the securities that surpassed the MiFID II limits of total dark trading on EU venues
    • From a Universe of 26,750 equity-like securities traded in the EU, 625 are currently suspended from dark trading either on specific EU venues (93 securities) or on all EU venues (532) after surpassing the MiFID II dark trading thresholds (4% dark traded in a given trading venue and 8% on EU venues to trigger suspension at EU level).
    • The number of instruments suspended from dark trading has decreased during the year from 755 in March 2018 and from 1,262 in August 2018 after c700 instruments completed its 6-month suspension period started in March
    • Annual dark trading volumes declined 21% in 2018 against 2017, in part attributed to the new DVC regime.

2018FY annual variation of European Equity activity