Quietest quarter in a decade for IPOs
The UK IPO market felt the impact of continued political uncertainty and wider geopolitical tensions, with just four listings taking place between July and September 2019 (Q3) – the quietest quarter for UK IPO activity in a decade.
According to EY’s latest IPO tracker (EY IPO Eye), following an upbeat tempo in quarter two (Q2) this year, when some 15 issuers made their stock market debut, two funds listed on the Main Market and two issuers were admitted to AIM in Q3 2019, raising £329m combined.
Scott McCubbin, EY’s UK IPO leader, said:: “Although quarter three is typically quieter for listings, the subdued markets were particularly telling. To see such low levels of IPO activity we must rewind back ten-years to Q3 2009, when the UK was just starting to pull out of recession.
“The uplift in momentum in quarter two this year looks to have been at the cost of Q3 as issuers drew their plans forward to take advantage of the IPO window, created by the extension of the Brexit deadline. Equally it is likely that companies have postponed their IPOs for more settled times in Q4 or even further ahead to 2020.”
In the first nine months of 2019 (YTD) 24 IPOs, raising £4.8bn, listed in the UK; 55% less in volume than the same period last year, when 53 IPOs raised £5.2bn. So far 2019 has seen a dramatic 71% fall in the number of AIM IPOs year-on-year, whilst Main Market floats were down by just over a third (36%), but there are positive signs of a busier time ahead.
McCubbin added: “Whilst activity appeared reasonably still in Q3, behind the scenes a number of issuers have signalled their intentions to list later in the year. A strong appetite to float also remains from both overseas and domestic companies who are ready and waiting in the wings.
“However, the possibility of a UK General Election could hugely derail plans and push potential issuers to postpone until 2020, to lower the risks of execution.”
Mirroring the performance in London, global IPO activity remained tepid. Compared to the same period last year (Q3 2018), the number of IPOs globally coming to market in Q3 2019 were down by 26% to 249, whilst proceeds fell by 24% to US$39.1b.
Affected by geopolitical volatility, IPO activity in the Americas was down by almost a third in the first 9 months of 2019 (YTD), compared to the same period in 2018, with EMEIA exchanges experiencing a 52% drop in volume.
Although the number of IPOs listed was down in Asia-Pacific by 9% YTD, it was offset by the launch of the much-anticipated Shanghai’s STAR Market in July, which elevated activity.
McCubbin said: “The backlog of high-quality IPOs continues to grow as issuers await more favourable market conditions. We expect global IPO activity to pick up in the last three months of 2019 and into 2020, particularly when there is more clarity to US-China trade tensions and developments around Brexit.”
