London IPO market enjoys solid start to 2018

Apr 11, 2018
Financial services sector dominating listings so far, EY reports

The London IPO market saw a solid start to 2018, despite some volatility, according to the latest EY IPO Eye report.

The London Stock Exchange’s main market saw nine IPOs, which raised a combined £1.15 bn ($1.63 bn), while seven flotations on the smaller Alternative Investment Market (AIM) raised £149 mn in total.

Both the main market and AIM saw a combined fall of 38 percent in deal numbers, however, while proceeds rose only marginally (6 percent), compared with the first quarter in 2017. The fact that only one of the nine main-market IPOs in the first quarter this year was private equity-backed held back the total proceeds raised, the report’s authors note.

The financial services sector is dominating 2018 so far, accounting for 11 of the 16 IPOs – from both markets – and 51 percent of UK IPO proceeds.

This focus confirms that London continues to hold its position as a global financial center, despite political uncertainty, according to the report.

Looking ahead, the influx of cross-border IPOs, which accounted for 26 percent of listings and 58 percent of proceeds in 2017, is likely to continue as businesses look to take advantage of the period of expected calm ahead of Brexit, the EY authors observe.

Scott McCubbin, EY’s IPO leader, says in a statement: ‘Although the market may remain low-key overall, the IPO pipeline is currently still looking strong for small main-market listings and AIM listings.

‘We expect to see some of the delayed listings from this quarter to come on-stream in Q2 and activity to peak in Q3 for this group of companies. There are some signs of more listings from larger companies anticipating more significant deal sizes, but this part of the market is very much waiting for a first-mover to lead the way.’

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