London’s IPO activity has seen a decline in volume and value in the third quarter by 47% and 71% respectively, according to the latest EY IPO Eye.
The Main Market saw eight IPOs, which raised £780m, while five flotations on the AIM raised £257m in total. This compares with the last quarter, Q2 2018, which had a total of 17 IPOs (Main Market – six, AIM – 11) and the same quarter last year, Q3 2017, which had a total of 30 listings (Main Market – 14, AIM – 16). According to the Eye, the low deal volume and proceeds largely reflects the lack of investor appetite for IPOs in a volatile and uncertain market combined with the continued low value of the British pound.
Financial services was the most active sector by deal number, claiming 6 of the 13 IPOs on UK exchanges in Q3 2018 and raising £743m.
Cross-border activity in the UK market boosted IPO volumes and proceeds this quarter, with companies coming inbound from the Philippines and the Netherlands to list on UK exchanges. London’s Main Market and AIM exchanges secured the 10th spot among the top 10 stock exchanges globally by volume and by proceeds and were ranked fourth for cross-border IPOs in YTD 2018.
Scott McCubbin, EY’s IPO Leader, comments: “Brexit uncertainty continues to cast a shadow over the London market making it hard to predict how IPO activity will unfold over the next few months.
“IPO candidates are keeping an open mind when it comes to exit strategies, which can lead to lower IPO volumes in 2018. For example, companies considering an IPO have accepted an acquisition offer instead, either from large corporations looking to add to their portfolio, or from cash-rich PE firms. However, the market has responded well to those that chose to list. Overall, recent IPOs had positive first-day returns and some very strong performances post-listing continue to demonstrate the quality that London Main market and AIM present to investors.”