FT says that the surge in initial public offerings in the US and Europe which started this year is set to continue next year

By Nicel Jane Avellana

Dec 18, 2013 11:12 PM EST

The surge in equity markets worldwide which have led firms and their sponsors to launch initial public offerings in the US and Europe this year is set to continue in 2014, the Financial Times reported. Bankers have lauded the width of sectors that have joined in the IPO revival for 2013 as equity buyers have shown robust interest even in companies with debt and those from the more challenged parts of the economy.

This trend is set to continue into next year as central bank stimulus of the stock markets and the global economy makes the environment conducive for issuers. However, whether these conditions stay the same still remains to be seen as investors still think about the effects of the US Federal Reserve's potential reduction in stimulus.

Another wild card for next year is the effect that reopening of the IPO pipeline in China will bring. This year, Asian listings have not performed to expectations. Where Alibaba will sell shares will also be a factor.

The report quoted Deutsche Bank Global Head of Equity Capital Markets Mark Hantho who predicted the IPO momentum to go on. He said, "You are going to see a resurgence of Asia and Europe in 2014."

In Europe where volumes in 2013 have more than doubled compared to last year and as improving economic conditions have boosted the confidence of issuers and investors, the optimism for IPOs is strongest. The report said this optimism is especially strong in the UK.

Martin Steinbach was quoted as saying in the report, "Investor sentiment has been strengthened by increasing valuations and low volatility levels. With record highs on the main European indices, low interest rates set to persist for the foreseeable future and European economies continuing their recovery, the stage is set for further expansion of IPO activity in 2014." Steinbach leads EY's IPO practice in Europe.

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