World Economy

London IPO Market Set for Record Year

London IPO Market Set for Record YearLondon IPO Market Set for Record Year

London’s IPO market has bounced back in 2014, as the year shapes up to bring in a bumper crop of floatation on the UK main market.

New research by Capita Asset Services, which has administered over 60% of this year’s IPOs in the UK, shows a dramatic uplift in the number of companies making their debut on the London Stock Exchange, with more companies taking to the stage than in any year since the recession, FTSC Global Markets reported Monday.

Across the UK main market, the international market and AIM, the sum raised by companies is finally approaching pre-crisis highs. In 2006, the record year, £25.6b of shares were sold in 307 IPOs.

So far in the year to August 2014, £11.6b has been raised through 92 IPOs, and this should reach at least £18.5b by the end of the year. Recent concerns about the appetite for initial public offerings mask an undercurrent of high value floatation in the last 12 months and flurry of activity in June and July, when £5.4b of shares was snapped up by UK investors.

The UK main market in particular is already closing in on the £8.7b record for money raised in 2011. By the end of August, it had already reached £7.4b. If it keeps up the current rate, floatation on London’s main market could well raise £11.7b before the year end, shattering pre-recessionary highs.

 Market Alive

On the junior AIM market, only 55 IPOs have staged so far this year, a far cry from the 325 in a busy 2005. However the average raised by these 55 companies, £32m each, is more than at any point since records began, suggesting the market is still alive and kicking. Encouraging larger, more liquid new issues is a big positive for AIM investors.

Consumer facing companies in particular have flooded the public market across the exchange in 2014. 32 companies, one in every three floating across the UK main market, the international market and AIM, have been in consumer goods and consumer services, with 13 of these being general retailers.

Indeed 57% of all the IPO money raised so far in 2014 has come to these consumer industries, a total of £6.6b in the year to August. The flotation of AA Plc in June for £1.35b was the largest in the period, followed closely by two international main market floatation for B&M European Value Retail (£1bn) and Lenta Ltd (£576m).

On the UK main market, Saga (£550m), Pets at Home (£464m), Poundland (£375m), and Zoopla (£352m) have helped bring the total figure raised by homegrown consumer companies to £4b.