BItNotes n°14

BItNotes n°14
 
"The evolution of Initial Public Offerigs in Italy"
F.Dalle Vedove, G.Giudici, P.A. Randone - June 2005

Abstract

In recent years, the IPO market in Italy has deeply changed, with respect to the %u2018rules of the game' and the characteristics of floating companies, both of which converged to the US practice. In this study we consider all IPOs of firms listed from 1985 to 2004 on the Italian Exchange, with the aim of analysing the evolution of four patterns: (i) the players involved, (ii) the complexity of clauses reported in the offering prospectus, (iii) the setting of the IPO price, (iv) the initial and long run market performance. We highlight that Italian IPO firms are younger and less profitable than in the past, raise more equity capital, are characterised by a less concentrated ownership structure, and are more frequently participated by pre-IPO private equity investors. We show that Italian IPOs adopted several features of the going public process in the US (green shoe, lock-ups, book building). The pricing process has considerably changed, postponing the setting of the IPO price after the emission of the prospectus, and then after the public offering itself, in order to incorporate all available information in the price. As a consequence, nowadays IPO pricing in Italy is somewhat even more efficient than in the US and in other European markets: the initial underpricing has considerably reduced after 2000 as well as the long run underperformance compared to the market general index.

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