IPO Eye Q1 2017

Article 50 is activated – what now for the UK IPO market?

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The London IPO market has seen a slow but steady start to the year as a result of businesses waiting for clarity around the triggering of Article 50 and political personnel changes in the US.

Activity still increased though as the quarter came to an end, with 17 IPOs in Q1, three more than the same period in 2016, but raising 25% less capital. This is largely due to the low level of businesses outside investment funds looking to list.

Main market: 12 flotations raised £1.1bn, the largest by Ocelot Partners Ltd, a non-equity investment vehicle. Financial services, funds and investment vehicles dominated the Main Market, with only three of the 12 listings coming from other sectors.

AIM: five admissions raised £99m, with GBGI, an integrated provider of international benefits insurance, the largest. Two of the IPOs (Xafinityplc and Ramsdens Holdings) were private equity backed and accounted for 23% of capital raised.

Newly listed stocks in Q1 have outperformed veteran assets, which are currently trading an average of 17% above list price, with only four stocks recording small negative growth.

 

“Volatility in currency and political uncertainty continue to hold back activity within the IPO market, in particular on Main Market listings outside of the investment industry. Now that the UK government has triggered Article 50 we are expecting a number of companies to list within the two year negotiating period to take advantage of the European passporting regulations, as well as the greater access to European investors that they offer. As a result, we expect to see a larger number of IPOs taking place in the last quarter of 2017 and early 2018.”

Scott McCubbin, EY’s IPO Leader for UK & Ireland