All eyes will be on the Warsaw Stock Exchange next Wednesday (12 May). This is when Polish insurance company Powszechny Zaklad Ubezpieczen (PZU) makes its much-anticipated initial public offering (IPO), which many observers believe will be a pivotal deal for European capital markets.

Not only will the IPO be the largest in Polish history but is also set to be one of the largest in Europe this year. PZU has offered 25.8 million shares, equivalent to a 29.9% stake in the company, expected to be worth ZLT8.07bn (€1.96bn). The float was nine times oversubscribed in the institutional tranche, indicating that investor appetite is strong. Around 40% of investors are from outside Poland.

Indeed, the PZU IPO is likely to cap off a breakthrough period for European stock exchanges. Indian company Essar Energy last week announced the largest London listing in almost three years with its $2.5bn float and, in Spain in late April, Amadeus, made a €1.3bn IPO debut on the Madrid, Barcelona, Bilbao and Valencia stock exchanges.

The successful conclusion of this trio of deals will be a major boost to the European equity markets, which have been in limbo since the economic crash. There have been signs of a comeback though. The debt capital markets across the Continent have been relatively robust over the past year or so with numerous bond issues and capital increases.

Sovereign bonds issued by governments have been especially prevalent. Banks and corporates have also been approaching the debt capital markets as traditional finance has either dried up or become exceptionally expensive. Big names include German drug company Merck, Swedish airline SAS and Telecom Italia owner Telco. On the flip side, such bonds and issues have provided higher returns than traditional financial products, making them attractive for investors.

A glut of European and international companies are now eyeing up IPOs in 2010. If the PZU float goes well, it could well provide that added confidence needed to spur on other candidates to push ahead with their listings. Moving away from debt to equity, rather like the economy as a whole, would be a welcome relief for most businesses. Good news for capital markets lawyers too.