The 10 IPOs that have completed this year generated an average return of 8.1%, according to Deloitte, the business advisory firm.
IPOs outperform FTSE 100
As at 31 March, these 10 IPOs outperformed the FTSE 100 by 10.0 percentage points over the quarter. This compares to an average return of 5.7% at 31 March 2014 on the six IPOs which completed in Q1 2014, outperforming the FTSE 100 by 7.3 percentage points over the quarter.
John Hammond, head of equity capital markets at Deloitte, said: “We are pleased to see that uncertainty over the upcoming general election, the Eurozone and the Middle East have not affected confidence in capital markets. This is demonstrated both by record highs in the FTSE 100 and the largest number of Q1 IPOs since 2007. However, we do expect capital markets to quieten down immediately before and after the election but once a new government is in place that activity will increase again in the second half.”
Lee Welham, Equity Capital Markets Lead Director at Deloitte in Cambridge, adds: “Even though the FTSE 100 climbed to an all-time high in March, IPOs which came to the market in the quarter have still, on average, significantly outperformed. An investment of £1,000 in each of the 10 IPOs would have been worth £10,809 at the quarter end, whereas a £1,000 investment in the FTSE 100 at each IPO date would have fallen to £9,814. IPOs remain an attractive route for investors to increase exposure to equities relatively fast and in significant size.”
The Deloitte office in Cambridge recently held an ‘IPO Masterclass’ to outline the issues that companies can face in the complex lead up to IPO, with guest speakers including the London Stock Exchange, Cenkos, Mills & Reeve and Horizon Discovery Group plc.
Matt McLoughlin, Corporate Finance Transaction Services Director at Deloitte in Cambridge said, “companies who are thinking of a future IPO have a large number of areas to consider. Execution of a successful IPO requires significant planning, both to achieve the required outcomes for investors and other stakeholders, and to deal with the many potential challenges which can arise. Our Masterclass provided a broad set of expert viewpoints and experiences to help local CFOs better understand this process as they move towards the next exciting phase of their growth stories”.
Note: IPOs as referred to above are defined as London Main Market Listings of shares for trading companies (i.e. investment companies, venture capital trusts, transfers from other markets, cash shells etc. have been excluded). The performance figures reflect share price movements only, take no account of dividends, and are not a measure of total shareholder return.
The Deloitte Cambridge office comprises 8 Partners and over 250 staff who deliver a full range of professional services to the East Anglian region. As well as focussing on the life sciences and technology sectors for which the region has become so renowned, the office has long standing specialisms in other sectors including the professions, consumer business, food and agribusiness.