European stock markets are open for deals again after an eight month drought but with investors still hurting from last year's poorly performing flotations and many companies not expected to be ready until later in the year, the recovery may be slow.

Dutch cable company Ziggo and Swiss-based Asian outsourcing specialist DKSH this week raised a combined total of around $2 billion through stock market listings.

They were the first large European initial public offerings (IPOs) since July last year when an intensifying euro zone debt crisis rattled stock markets and investors.

Both IPOs attracted enough investor demand that banks running the fundraisings closed their order books early and priced the new shares at the top of their expected ranges.

This boosted confidence in the market, but only the better assets in the IPO pipeline are likely to be able to follow suit.

Investors remain cautious as to how they invest their money, said Mark Hughes, capital markets partner at PwC.

Just because we see a couple coming through, it doesn't mean that all of a sudden the floodgates will open and we will have a high volume of activity.

Ziggo and DKSH had attractive features not shared by all potential IPO candidates, people working in the IPO market said.

Ziggo is a well-known name in a resilient sector with good growth prospects, investors understood its business model well and it was also offering a good dividend. Interest in DKSH, which helps companies market and distribute their goods in Asia, was boosted by its exposure to the fast-growing region.

The European IPO market is open again for attractive issuers, said Johannes Borsche, a managing director in equity capital markets (ECM) at Morgan Stanley. For the first time in a long while there is significant interest of UK- and US-based investors in the shares of an IPO candidate.

One of the companies considered most likely to take the plunge is German chemicals maker Evonik. Buyout firm CVC , which owns around a quarter of the company, has said it could be listed by the end of June.

What is reassuring is that the market has now come back to focussing on the quality of the equity story as opposed to things like correlation risk and macro events, Viswas Raghavan, global head of ECM at JP Morgan, told Reuters.

Adverse macro news flow has slowed and investor attention is again shifting to the fundamentals of what they are buying. However, if the negative macro news flow picks up again, this pendulum could swing quickly to the other end of the spectrum.


Interest from investors, who are still in the red on most of last year's European IPOs, will also be influenced by how completed offerings trade in the coming weeks and months.

Around 75 percent of 2011's largest European listings are trading below their offer price, including one of the year's most high profile IPOs, commodity trader Glencore , whose stock is still 22 percent below its debut price.

Offering hope, DKSH closed more than 6 percent higher on its market debut, while Ziggo rose as much as 18.6 percent above its offer price on its first day of trading on Wednesday.

Oil producer Ruspetro which raised $250 million from an accelerated IPO in January, is now trading at around 41 percent above its offer price of 134 pence.

With a full pipeline of deals, many of which are private equity-backed businesses, discussions about IPOs have picked up significantly, bankers said. Italian aero-engine parts maker Avio is among those said to have restarted work on a possible listing.

But with IPOs normally taking months to prepare, timing will also now be an issue for many.

You can't just switch on the tap today and expect to IPO in 3 weeks time, it doesn't work like that, said PwC's Hughes.

After a dismal second half of 2011 and with no sign of an improvement in markets at the turn of the year, many companies had put their IPO plans on hold rather than spend time preparing for a listing that might be put off.

But European stock markets have seen some confidence return. The pan-European FTSEurofirst 300 <.FTEU3> index of top shares is up around 9 percent since the start of the year and last week hit an eight month high.

It was only two-and-a-half months ago everyone was saying 'here we are going in to 2012 it is going to be a nightmare'. All of a sudden the markets are up ... it has taken a lot of people by surprise, said a London-based ECM banker.

For those not already in the market, the next available window begins after the Easter break in early April but most are aiming for September onwards.

There are not a large number of deals people are working flat out on right now and you would need to be for the May/June window, said Paul Etienne Kumleben, partner at law firm Davis Polk & Wardwell.

(Additional reporting by Arno Schuetze in Frankfurt; Editing by Alexander Smith and Anna Willard)