2017 looking brighter after quiet year for IPOs
THE EU referendum result has compounded the so far slow year for new stock market listings, but experts say the recovery in market pricing is likely to make IPOs an attractive option again.
In the third quarter of 2016 there were a total of six listings, including one in the North West. The UK figure is down from 13 in the previous quarter, but at the same level as in the third quarter 2015.
There were two listings on the Main Market that raised £183.3m and four on AIM raising £42m – a total of £225.3m.
The North West recorded one flotation in this quarter; Manchester-headquartered Widecells Group, which raised £2m in July.
According to EY’s IPO Eye report, of the six IPOs that were priced and started trading this quarter, only one was a foreign business (SEC SpA an Italian media and entertainment business that raised £3.4m) reflecting the international implications of the Brexit vote.
Newly listed stocks in the third quarter have outperformed veteran assets, which are currently trading at an average of 32% above list price.
Looking ahead higher valuations and lower volatility could see IPO activity pick up, the report said, adding that while a return to the record levels of 2014 may be a stretch, activity in 2017 could surpass 2015.
Richard Harding, EY partner and IPO leader in the North West said: “Following the markets’ strong recovery and the added interest of US and Asian investors looking to take advantage of the weak pound, we now expect a number of firms to dust off their IPO plans.
“It will be the specific characteristics of the individual companies that drive investor interest. Companies in the retail, technology, and media and entertainment sectors are likely to be the most attractive, mirroring previous quarters. We could well see a resurgence of IPOs in 2017, as firms look to take advantage of global investor interest in the UK market.”
