IPO Eye Q3 2013

In this quarter

  • Share

Main Market

This quarter saw one main market listing, as London-based estate agency Foxtons raised £390m. With Crest Nicholson’s and Countrywide’s transactions earlier this year, 2013 has been particularly favourable to the real estate sector, producing total funds raised of over £800m – a further sign that the UK property market is recovering.

At the time of publishing, Foxtons was trading well at approximately 25% above its initial placing price. It was also the seventh PE-backed business to move onto the main market this year, a further sign that private equity now sees IPO as a realistic exit option for the right assets.


Main market performance

EY - Main Market Performance

AIM

AIM provided a steady quarter, producing fifteen IPOs raising cumulative funds of £211m. Of these, seven were technology businesses, further establishing AIM’s credentials as a capital raising destination for fast-growth emerging businesses.

2013 has been particularly favourable to the real estate sector, producing total funds raised of over £800m, a further sign that the UK property market is recovering.

North-west based Conviviality Retail raised £64m from investors, and has performed strongly, trading almost 60% above its initial trading price (at time of publishing). The retailer, who runs the Bargain Booze outlets, has subsequently used funds raised to acquire the chain Wine Rack, which it hopes will fuel further expansion into the southern UK market.

Of the fifteen companies listing on AIM this quarter, ten were based overseas. Issuers were drawn from across Europe, the US, and Asia, again highlighting the market’s geographical pull. Given the UK economy’s perceived stability, and these successful listings, it can be hoped London will continue to be a favoured capital raising destination for fast-growing foreign companies.

Pricing

On the whole, aftermarket performance of Q3 IPOs has been good, with share prices closing at quarter-end an average of 21% above initial placing price. Malaysian based cloud computing specialist Rapidcloud International was a strong performer, closing 88% above initial placing price, while Foxtons, the one main market IPO, performed solidly, closing 17% above its initial placing price at quarter-end.


FTSE Indices

EY - FTSE Indices

The FTSE indices dipped this quarter to buck the year’s continuous upward trend. Disappointing forecasts of China’s manufacturing sector combined with the Federal Reserves June 24 announcement that it would remain flexible on the pace of bond buying, resulted in the FTSE indices reaching some of their lowest levels in 2013. However, since then they have recovered, with the FTSE 250 and AIM indices reaching 2013 highs during Q3.

On the whole, aftermarket performance of Q3 IPOs has been good, with share prices closing at quarter-end an average of 21% above initial placing price.