Forty-five companies went public in London in the first half of the year, with another six announcing their intention to list by the end of 2021, a sign of the ‘UK IPO market’s continued resurgence’.
That figure of 45 IPOs in six months is far higher than the 31 that listed on the London Stock Exchange’s (LSE) Alternative Investment Market or Main Market in 2020, according to research from international law firm Pinsent Masons.
It notes that with 20 companies going public in the first quarter of the year, ‘there were more IPOs in Q1 2021 on the LSE than in any previous first quarter of the year since 2007.’
Tech firms (11 IPOs), online retailers (seven listings) and healthcare companies (six IPOs) have been among those taking advantage of increased investor appetite, with Pinsent Masons noting that for many in these sectors, ‘Covid-19 has provided a strong tailwind to help their sales growth.’
Despite the strong start to the year, however, Julian Stanier, head of corporate finance at the firm, says there are signs that summer could bring a lull in listings.
‘This has been the busiest period for LSE IPOs for about 15 years,’ he says in a statement accompanying the data. ‘Not every company that is queuing up will achieve a listing; investor appetite has remained strong in H1 but we are beginning to see some signs of indigestion. We are hearing stories that fund managers are fatigued and tiring of so many roadshow meetings.
‘With the much-anticipated end of [UK] lockdown [restrictions] a few weeks away and summer holidays around the corner, there is likely to be a sharp decline in activity in the weeks to come.’
He adds that ‘the race is still on’ to get IPOs completed before any dip in activity. ‘After that we have a healthy pipeline of IPOs scheduled from September with a number of issuers keen to be straight out of the blocks post the summer break,’ he says. ‘But we will have to wait and see whether investor appetite continues at the same levels.
‘The easing of lockdown restrictions in the coming months may also provide companies from the industries hardest hit by Covid-19 to consider an IPO as their ‘recovery’ story becomes clearer.’
Stanier notes, however, that some of these companies could be ‘gobbled up by healthier peers or private equity houses.’