IPO WATCH: Europe Perks Up With Atento, Avio; Glencore Looms

Europe's IPO market perked up a bit this week and bankers said several more companies are poised to enter the pipeline once Glencore International PLC's landmark London deal wraps up next week.

Atento, the call-center unit of Telefonica SA (TEF.MC), started pre-marketing this week for its planned deal, which is being brought to help Telefonica reduce its debt. A price range will be set in about two weeks, a person close to the deal said, and management will then start a two-week roadshow before final pricing in June.

Banks holding the mandate are Citigroup Inc. (C), Goldman Sachs Group Inc. (GS), Banco Santander SA (STD), Banco Bilbao Vizcaya Argentaria SA (BBVA), BNP Paribas SA (BNP.FR) and JP Morgan Chase & Co. (JPM).

In Italy, aerospace company Avio has mandated five banks to run its initial public offering, though a formal launch isn't expected until early next year in Milan. JPMorgan, Barclays PLC (BCS), Intesa Sanpaolo SpA (ISP.LN), Morgan Stanley (MS) and Deutsche Bank (DB) are on the deal, people familiar with the situation told Dow Jones Newswires on Wednesday.

Avio hired Rothschild in April to advise on the process and solicit bankers for the IPO slate. The company is 81%-owned by London-based buyout firm Cinven, which bought the company for EUR2.57 billion in December 2006. Finmeccanica SpA (FNC.MI) owns 14%.

More new deals are due next week and the following week, as issuers look to get their IPOs completed before the traditional summer lull kicks in around July.

"We will see a wave in the market after Glencore completes, and there is also a strong pipeline building for the second half," one banker said.

That comment aligned with statements made earlier this week by London Stock Exchange Group PLC (LSE.LN) Chief Executive Xavier Rolet that the pipeline is approaching levels last seen in early 2006.

London has had a modest year so far for IPOs, though, with Dealogic data showing that U.K. IPO volume dropped to just $3.9 billion between Jan. 1 and May 10, from $5.2 billion in the same period of last year. There have been 13 deals priced and about the same number put on ice after a lack of investor interest. In 2006, $16.17 billion was raised, followed by $24.8 billion in the comparable 2007 period.

Peter Lees, head of U.K. equities at F&C Asset Management PLC (FCAM.LN), in a note Thursday said U.K. IPOs may be struggling this year in part because there are fewer investors focused solely on U.K. stocks, reflecting the shift toward global equities funds.

"Secondly, the IPOs have come relatively late in the investment cycle. We are just over two years into the recovery and as such 'the risk trade' is less compelling. Investors are therefore perhaps more inclined to support the companies they really believe in and truly understand rather than simply investing in the latest new stock," Lees said.

The latest disappointment for the London Stock Exchange this week was the pulled $500 million float of OAO Russian Helicopters after insufficient investor demand within the stated price range. The state-owned manufacturer had been looking for a valuation of between $1.8 billion and $2.38 billion. It said Wednesday that potential investors "will benefit from more time to reflect upon the true value and growth potential of our business."

There was still plenty of attention this week on Glencore, which is due to announce its final IPO price May 19. The company's CEO, Ivan Glassenberg, Thursday told a Hong Kong conference by video link that the recent sell-off in commodities doesn't change underlying fundamentals in the market from countries such as India and China increasing their consumption.

Glencore is looking to bring London's largest-ever IPO, with about $11 billion due to be raised through new and existing shares and including an overallotment. The Hong Kong offer to retail investors will raise about $318 million.

-By Margot Patrick, Dow Jones Newswires; +44 (0)20 7842 9451; margot.patrick@dowjones.com

(Marietta Cauchi contributed to this article.)

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