Listings by big European and emerging markets companies are helping equity capital markets activity pick up steam again after the market correction in May and June, when many smaller share issues were pulled or shelved.

Bankers say the stock market's steep fall in May and June, triggered by concerns over equity valuations and rising interest rates, has made investors more selective, however, over what they buy and the price they pay.

The market's swung back from a sellers' market to a buyers' market. The mood is entirely different, said Jan de Ruiter, global head of mergers and acquisitions and corporate finance at Dutch bank ABN AMRO.

I don't think this will affect the number of IPOs, but it will probably affect valuations.

A merger and acquisition boom in Europe has helped boost equity capital markets business this year, with some big deals financed via share issuance. But bankers say there is also a lot of equity capital markets business unrelated to the M&A bonanza.

I think IPOs will be the trend for the year, de Ruiter said.

European companies raised $38.33 billion (20.25 billion pounds) in equity and equity linked issues in the third quarter, according to preliminary data from finance industry data provider Thomson Financial.

The overall figure was still down versus the $42.21 billion raised in the third quarter of 2005.

The IPO category was the star performer, with offerings raising $21.61 billion, the highest third quarter total since the 2000 Internet boom.

Russian oil company Rosneft's $10.65 billion flotation dominated the IPO arena in the quarter.

The July float managed by ABN AMRO, Dresdner Kleinwort, JP Morgan Chase and Morgan Stanley ranked as the world's fifth biggest IPO on record.

BIGGER IS EASIER

The market correction may make smaller IPOs tougher to pull off, bankers say, as investors seek slightly lower risk.

The larger issues are more likely to get done, because liquidity is currently at a premium. Smaller, more esoteric IPOs may prove more challenging to execute, said Paul Raphael, head of European Equity Capital Markets at Credit Suisse.

ABN AMRO's de Ruiter said the bank's pipeline of IPOs was made up of large deals: The billion, 2 billion type of deal.

He added that infrastructure capital deals would continue to dominate the IPO market.

The development of emerging markets will push greater numbers of companies to turn to London for primary or dual listings as they seek an international investor base.

In emerging markets you will see telecoms and retail. If you have economies which are developing, then telecoms and retail are a necessity, de Ruiter said.

European convertible bond issuance continued to be suppressed in the third quarter.

Convertibles raised $3 billion, up from the second quarter but way below the heady times from 2000 to 2004 when proceeds would often exceed $10 billion.

Although the market has picked up since the May and June correction, a more sustained recovery in issuance has failed to materialise, and often complicated convertible deals have remained out of fashion

Investment ABN Amro