finance

Strongest UK first quarter IPO performance in 14 years – EY



UK listings experienced a strong start to the year, with more funds raised in the opening quarter of 2021 than in any other opening quarter since 2007 – and the most raised in a single quarter since 2014.

According to EY analysis, both the main stock market and the Alternative Investment Market (AIM) built on the resurgence of activity seen in the second half of 2020, with 12 initial public offerings (IPOs) raising £5.2bn on the main market and eight IPOs raising £441m on AIM.

First quarter fundraising achieved a total of £5.6bn, more than half of the £9.4bn raised in the whole of 2020.

Total funds raised in 2021’s first quarter were the largest of any opening quarter since the £5.8bn of new money raised in 2007 – and the most raised in any quarter since the £6.9bn raised in the second quarter of 2014.

The performance during the first three months of 2021 is in stark contrast to the same period in 2020, when there were just three IPOs on the main market and two on AIM, which raised a combined total of £615m.

Mike Timmins, EY partner and Scotland IPO leader, said the markets appear to have weathered the effects of Brexit and bounced back from the stall in activity caused by the onset of the pandemic a year ago.

“I’m pleased to see that this uptick in activity has been seen in Scotland with both AMTE Power and Parsley Box listing on the AIM market in recent months.

“With an effective vaccine rollout underway, momentum and confidence in the UK IPO market should continue to build, but future growth may vary depending on the sector.”

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In addition to IPO activity, follow-on activity has also been strong in the UK, with existing issuers raising more than £9bn in the first quarter of 2021.

Confidence in the UK’s IPO markets as an exit route has been reinforced by the significant private equity activity in the quarter.

Three private equity-backed IPOs – the same number as in the whole of 2020 – were responsible for 41% of funds raised in the first quarter of 2021, with the biggest, Dr Martens, raising £1.5bn.

The first quarter of 2021 also saw the release of the findings of the UK Government-backed Hill Review of the UK listings regime, with a view to ensuring the UK markets remain competitive on the global stage.

The first recommendation is currently out for consultation by the Financial Conduct Authority.

Timmins said: “Given the tech sector is of increasing importance for both the IPO market and wider economic growth, the UK’s ability to attract tech IPOs is likely to be under scrutiny.

“The reputation of the UK as a tech IPO market will in part depend on the performance analysis of listings that fall within this broad sector, which includes both traditional tech companies and those that heavily rely on technology.”

Globally, EY reported that IPO markets have had the best start to the year in over 20 years, with more than $65bn being raised in over 300 IPOs.

Technology sector IPOs have led the way, with NASDAQ being the leading global exchange, hosting 46 IPOs and raising more than $18bn in the process.

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The UK has maintained both its position as the leading listing location in Europe for fund raising and, on a global basis, remains in third place behind the US and China for funds raised via IPO.

Helen Pratten, EY strategy and transactions partner, added: “The increase in UK IPO activity, which began in the latter half of 2020, is expected to continue at pace as confidence in the post-pandemic landscape builds and the UK’s credentials as an international leader hold fast.”

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