- UK IPO market subdued in 2019, mirroring global landscape
- Geopolitical uncertainty has contributed to the quietest year for UK IPOs in the last decade
- Uptick in activity predicted following General Election.
2019 was the quietest year for London IPOs in a decade, with the number of listings falling by 56% year-on-year, according to EY’s latest IPO tracker (EY IPO Eye).
Last year, 35 IPOs listed in London - 24 on the Main Market and 11 on AiM - raising £5.9bn, compared to 79 listings in 2018 - 44 on the Main Market and 35 on AiM - raising £9.5bn. Notably, the reduction in AiM admissions was particularly prominent and continues a downward trend, which began in 2018.
By funds raised, the largest IPOs in 2019 were Network International (£1.2bn) and Trainline.com (£1.1bn), which were both previously backed by private equity.
Scott McCubbin, EY’s UK IPO Leader, commented: “Amidst unprecedented geopolitical uncertainty, 2019 was a challenging year for the global public markets, and London was not alone in experiencing a downturn in activity. That said, we did see some high-profile listings in the UK last year raising significant funds, with the majority performing well post IPO.
“But despite market volatility and less certainty compared to trade deals, IPOs remain an exit route for private equity. 53% of all IPO proceeds raised in London were from private equity backed companies, compared to a global average of 29%.”
2019 – decade low
In the last quarter of 2019, eight IPOs listed in the UK (5 on the Main Market and 3 on AiM) raising £1.1bn, accounting for less than a fifth of the total proceeds raised in the entire year. In contrast, in the same period last year (Q4 2018) 25 IPOs came to market raising four times the funds - £4.4bn.
Scott added: “Although we saw a slight pick-up in IPO activity in the last quarter of the year, 2019 will be noted as a decade low point for UK listings. However, whilst overall IPO numbers fell last year compared to 2018, post listing performance improved, with almost 80% of 2019 IPOs trading-up compared to the listing price at the year-end.”
Largest global IPO of the year
2019 welcomed the largest global IPO with Saudi Aramco raising $25.6 bn in Q4, but overall global IPO activity in the year was down, both in terms of deals and proceeds. Globally, 1,127 IPOs registered last year, with proceeds of US$202b – a 19% fall in deal volume and a 2% decrease in proceeds compared with 2018.
In 2019, nine international companies chose London as their destination to IPO, reaffirming the city’s status as a leading international listing venue, with the UK ending the year ranking fifth behind the US, China, Hong Kong, and Saudi Arabia in terms of overall funds raised.
Scott concludes: “With the election now behind us, and some more certainty around the UK’s position on Brexit, we can expect more buoyant IPO markets in 2020, particularly in the first half of the year. However, markets are expected to become more volatile leading up to the US Presidential elections in the second half of 2020.”