The UK IPO landscape: A pre-Brexit review
As Brexit date fast approaches, we take a look at the UK IPO landscape and assess the impact of the UK’s ‘leave’ vote – both currently and in the future – by hearing the views of Neil Glover, IPO business development director at EY.
What has been the impact of the Brexit vote on the IPO landscape thus far?
The initial impact of Brexit was to cause a decline in the IPO market as companies held back their plans to assess its effect. Now, however, we are starting to see a period of higher activity as companies look to take advantage of the regulatory stability we currently have before Brexit is actually implemented.
What are the expected changes when Brexit finally takes place?
The initial changes are not expected to be significant for the UK IPO market, other than the prevention of prospectus passporting. Given that less than 1 percent of the market has used this, however, the impact of this change should be limited. Longer-term changes at the Financial Conduct Authority and/or UK Listing Authority are expected but, as yet, we have no sight of what these may be. But they are likely to support the IPO market rather than hinder it.
What are the main challenges Brexit brings to the IPO landscape?
The markets always react badly to any political changes and it seems likely Brexit will cause two or three years of geopolitical disruption. It has the potential to either lead to a quiet IPO market, or lead to an IPO market that experiences significant volatility [of share price after listing has taken place].
What are the main things IROs need to consider when communicating these changes and challenges to shareholders and potential investors?
Investor relations professionals need to focus less on these changes and more on their organization’s performance in comparison to its peers. There are likely to be many changes as a result of Brexit that will require a rapid response from business. Ultimately, however, the focus should be on the organization’s performance – which is what its shareholders and investors bought into in the first place. Potential investors will be looking to companies that are able to ride out the challenges and make the most of the business opportunities.
Do you have any final recommendations to share with IROs?
Being level-headed and pragmatic is what’s needed to perform well throughout the Brexit process. Strong resources, along with careful planning, will help businesses to succeed. Although the detail behind Brexit still isn’t known, businesses in the UK have faced many challenges before; this is just the latest one they will experience.