* Europe lags Asia, U.S. IPO revival, but pipeline improving
* H1 2010 seen most likely time for restart - RBS survey
* Rights issues have been crowding out IPOs
By Daisy Ku
LONDON, Sept 22 (Reuters) - Initial public offerings (IPO) in Europe are slowly waking from their coma, trailing lively markets elsewhere as healthy firms seek to raise funds after a welter of emergency rights issues.
A number of European companies plan to list this year, reopening a market that has been virtually shut even as investors lapped up billions of dollars worth of newly issued shares in Asia and the United States.
"We will see a very active IPO market again early next year," Peter Guenthardt, head of equity capital markets in the European, Middle East and Africa region for UBS, said at a conference organised by IFR, a Thomson Reuters publication, on Tuesday.
Companies raked in just $672 million in IPOs in the first 36 weeks of 2009 -- a paltry 0.4 percent of the region's overall $159 billion equity capital market including rights issues, placements, and others, according to Thomson Reuters data.
If history is anything to go by, European IPOs will recover once the recession has bottomed out. Bankers hope to tally up $30 billion to $40 billion in deals next year.
A majority of investors predict the European IPO market will re-open by June 2010, according to Matthew Kirkby, global head of equities origination at Royal Bank of Scotland, who was also speaking at the IFR forum.
A poll of investors showed 15 percent expect the IPO market to re-open in the fourth quarter, 52 percent predict it will kick into life in the first half of 2010 and 27 percent reckon it will be in the second half of 2010, Kirkby said.
Signals are looking more promising, including falling market volatility -- the CBOE Volatility Index returning to 25 from as high as 80 last year.
When the previous economic cycle began to turn in 2004, IPOs in Europe rebounded to account for 20 percent of all share sales, up from 6 percent the previous year, according to Thomson Reuters data.
They then continued to grow for the next three years, reaching 35 percent of the market in 2006 and 2007.
DEALS QUEUE
Asia and the United States have seen IPO activity return before Europe, as is the case traditionally.
Asia Pacific IPO deals were worth $22.8 billion, or 64 percent of the global tally for the first 36 weeks of the year. That made up 27 percent of the total share offers in the region, compared to 3 percent in the U.S. market and under 1 percent in Europe.
But a pipeline is now building in Europe. Norwegian marine geophysical group Polarcus is aiming for a $125 million deal and Dutch insurer Delta Lloyd, a subsidiary of the UK's Aviva, is planning a $1 billion listing in October.
Germany2, a special purpose acquisition company (SPAC), is planning a $400 million sale and Unity Media, Germany's No. 2 cable operator, is preparing to list towards the end of the year at the earliest, raising up to 1 billion euros.
Bankers and lawyers are also talking to private equity firms, which are looking to flog off earlier investments.
BC Partners is poised to pick banks to prepare a flotation of Medica, the French care-home company, people familiar with the matter told Reuters last week.
And Bologna-based online fashion retailer Yoox this month decided to float in Italy by Christmas.
IPOs will be a key exit route for private equity firms that have been unable to sell businesses in the last two years, especially in the absence of secondary buyouts and strategic buyers, said Craig Coben, Bank of America European ECM head.
SECONDARY DOMINANCE
Investors so far this year have been overwhelmed by a slew of rights issues, dulling appetite for more risky IPOs.
"It's difficult to draw asset managers' attention to new companies without track records while they are pre-occupied by the needs of those they are already invested in," one investment banker said, asking not to be named.
Most of the secondary issuance has been in the form of rights issues for companies looking to repair their balance sheets.
European firms including HSBC, Rio Tinto and Enel have raised $159 billion through rights issues during the first 36 weeks of the year -- compared to $142 billion in the United States and $61 billion in Asia.
And European IPO candidates face competition for investors' money from high-growth companies in emerging markets.
"People are turning to Asia for high growth companies while the U.S. tends to reopen ahead of Europe (giving U.S companies a head start)," a second banker said.
Asia, driven by the Chinese economic growth engine, has traditionally had a higher proportion of IPOs than other types of stock sales -- 40 percent of the total share deals on average over the past 10 years. (Editing by Douwe Miedema and Sitaraman Shankar)