The London Stock Exchange registered its best start to the year for company floats in more than a decade, despite a limp debut for Deliveroo.
High-profile IPO listings from the takeaway food firm, consumer reviews site Trustpilot and a host of smaller firms on the Alternative Investment Market (Aim) made the start of 2021 a boom quarter, according to the latest snapshot from EY.
The financial services firm said 12 IPOs raised £5.2bn on the main market, while eight garnered £441m on the smaller Aim, in the most lucrative first quarter since 2007.
Despite Deliveroo’s poor start to trading – its shares closed at 254p on Friday after listing at 390p – London remains the place in Europe for private companies to go public, EY claimed.
Scott McCubbin, an EY partner, said: “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. 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 performance during the first three months of 2021 is in stark contrast to the same period last year, when there were just three IPOs on the main market and two on Aim, raising a combined total of £615m.
Despite the pandemic, a host of big-name firms are planning to go public in London later this year. Cybersecurity company Darktrace could list on the London exchange with a valuation in the region of £3.8bn.
The EG Group, which owns petrol stations and fast food outlets, is also on investors’ watchlist with a listing that could value it at £10bn. The Scottish beer firm Brewdog is another contender, having long flirted with a London flotation.
Rishi Sunak recently loosened City listing rules to attract more tech floats in a move that helped grease the wheels of Deliveroo’s choice of London for its IPO. But McCubbin warned that the UK would struggle to rival markets across the Atlantic unless the chancellor went further.
“Such a positive performance in the first quarter shows confidence in the strong fundamentals of the UK IPO market. While some believe there is a risk of compromising on current strengths if the UK seeks to adapt to bolster its tech status, the UK would likely have to make some significant changes if it were to rival the US in this area,” he said.
