UK IPO activity likely to ‘slide to a near standstill’ in next 12 months following slow 2016


30-06-2016

The subdued levels of IPO activity seen this year are expected to continue into 2017 bringing the UK IPO market to a near standstill, according to EY’s IPO Eye released this week.

 
  • Q2 2016 sees 13 listings raising a total of £553m
  • Overall newly listed stock is on average a strong 20.5% above list price
  • Changing UK economic landscape means IPO activity set to remain low

In the second quarter of 2016 there were a total of 13 listings, down from 15 the previous quarter. The four listings on the Main Market and nine on AIM raised a total of £553m – just 30% of the capital raised in Q1 2016 and 52% lower than Q2 in 2015.

Investor confidence appeared to fall in the run up to the EU referendum, affecting both the volume and pricing of IPOs. However, overall newly listed stock in Q2 was still a strong 20.5% above list price on average, with only two stocks trading below their list price.

According to the IPO Eye a number of businesses that were prepared and could have listed as quickly as Q4 2016 are now expected to put their plans on hold until there is a more certain economic and political outlook in the UK. .

Scott McCubbin, EY’s IPO leader for UK & Ireland, commented: “Raising capital is likely to be more difficult in this environment. IPO activity was already slow across the UK due to a wide range of economic and political uncertainties. Following the result of the EU referendum we expect UK IPO activity to slide further to a near-standstill in the next 12 months as investors absorb and process the changes to the UK economic landscape.  

“One area of increased activity however could be from US and EU private equity funds looking to acquire assets in the UK, particularly if there is an impact on business valuations and a lower pound.

“Companies will want to see clear signs of certainty and long term planning if London’s Main Market and AIM are to remain major listing destinations. If these conditions are not in place soon, there is a risk that some companies may start exploring alternative markets like the US.”

 

EY is a global leader in assurance, tax, transaction and advisory services. With over 400 employees in our Cambridge and Luton offices, our teams provide a range of services to a variety of sectors, including manufacturing, life sciences, consumer products and retail, technology, real estate and construction, health, and the public sector. The broad array of companies across the East allows us to bring real, relevant and key insights to our clients.

EY