IPO Eye Q3 2015

Quiet Q3 due to pushed float plans to avoid any post election volatility

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The number of IPOs during Q3 fell dramatically as many businesses decided to hold back on IPO preparations pending the outcome of the General Election.

This decision to put float plans on ice made these businesses unable to react quickly enough and fast track plans when the surprise election result came through, producing low levels of IPO activity, according to EY’s latest IPO Eye.

There were only 6 IPOs in Q3 ‑ 2 main market and 4 AIM ‑ raising £194mn versus 19 IPOs raising £1.5bn in Q3 2014, and 22 IPOs and £3.4bn raised in Q2.

Overall, companies that listed on the Main Market performed well, with shares trading on average at 35% above offer price. However AIM fared worse, with stock on average -10% below offer price.

Overall, newly listed stock on both markets in 2015 YTD is trading on average 19% above offer price.

Main market: 2 floats raised £149mn, one each in the technology and travel sectors.

AIM: 4 AIM admissions raised £45mn, of which the most interesting was the flotation of Vietnamese software company MySQUAR Limited.

Global IPO activity declined 31% by volume in Q3, and proceeds dropped 74% quarter-on-quarter (or 58% lower if we exclude Alibaba Group Holding Ltd’s US$25.0b IPO in September 2014). The decrease is mainly caused by Asian market volatility and devaluation of the Chinese yuan. Suspension of IPO activity on mainland China exchanges since early July also weighed heavily on deal volumes, particularly larger deals.

However, IPO activity on US and EMEIA exchanges was also markedly slower compared to Q3 2014.