Page 280 13. European IPO markets: a postissue performance study Benoît Leleux and Daniel Muzyka European initial public offerings: an introduction Secondary markets in Europe have been thrown into a recession of their own in the late 1980s and early 1990s, with a rapid decline in both the number of new firms applying for a listing and the total amounts of financing raised. France declined from 53 IPOs in 1987 to less than 11 in 1991. The United Kingdom plummeted from 128 to 36 IPOs over the same period. While cycles in the volume of new introductions have been witnessed in the past, the current decline seems to be more than cyclical, leading some market authorities to reconsider the very existence of their secondary markets: Britain closed its Unlisted Securities Market to new entrants in late 1994 after having shut down its third market in late 1990, Holland shut its second market in 1993, and other markets, such as Germany, Spain, Italy, Denmark or Belgium have seen very little if any activity over the last three years.1 Particularly affected are professional investors such as venture capitalists, which have long relied on public equity markets to realize a significant proportion of their investments.2 Without this harvesting mechanism at their disposal to modulate ownership and reallocate investments and skills, investors are now forced to reconsider the desirability of some investments in light of the reduced exit opportunities set. Conventional explanations for the rapid decline of the markets include overregulation,...
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