The UK saw a boom in listings in the first quarter of 2021, with more funds raised in the opening quarter of the year than in any other opening quarter since 2007, according to EY. London also marked the most funds raised in any single quarter since 2014.
Total funds for the quarter were more than half of the total £9.4 bn ($13 bn) raised in the whole of 2020, according to EY, with both the main market and the Alternative Investment Market (Aim) seeing a rush of listings. After a halt by the Covid-19 pandemic, IPO activity began rebounding in the second half of 2020.
First quarter fund-raising achieved a total of £5.6 bn, says EY, with 12 IPOs raising £5.2 bn on the main market and eight IPOs raising £441 mn on Aim. That compares with the first quarter of 2020, when just three companies listed on the main market and two on Aim.
‘The UK has had the strongest opening quarter for IPOs for 14 years, with the markets successfully weathering the effects of Brexit and bouncing back from the stall in activity caused by the onset of the pandemic a year ago,’ says Scott McCubbin, EY partner and UK&I IPO leader, in EY’s IPO Eye report. ‘With an effective vaccine rollout under way, momentum and confidence in the UK IPO market should continue to build, but future growth may vary depending on the sector.’
The numbers show that, despite Brexit, the UK has maintained its position as the leading listing location in Europe for fund-raising, according to EY. On a global basis, the UK remains in third place behind the US and China for funds raised via public listings.
‘The increase in UK IPO activity, which began in the latter half of 2020, is expected to continue apace as confidence in the post-pandemic landscape builds and the UK’s credentials as an international leader hold fast,’ says Helen Pratten, EY strategy and transactions partner, in the report, though she adds that the boom in special purpose acquisition companies (Spacs) could have an impact. ‘There is clearly competition for IPOs from US Spacs seeking acquisition targets in the UK, which could affect or reshape the market here.’
According to EY, the strong start to the year was not just seen in the UK: global IPO markets have had the best start to the year in more than 20 years: in excess of $65 bn has been raised in more than 300 IPOs, with technology listings leading the way and Nasdaq named as the top exchange. Nasdaq hosted 46 IPOs in Q1 2021, raising more than $18 bn.
The $65 bn figure excludes US-focused Spac listings, adds EY, noting that these have ‘also been extensive in the quarter’ with around 300 Spacs raising more than $90 bn, compared with around $80 bn in the whole of 2020.