IPO activity set to slow over Brexit concerns despite late rally to end 2018

IPO activity in London could be subdued in the first quarter of the year despite a late rally in 2018 as companies react to Brexit uncertainty.

The fourth quarter of 2018 saw the highest number of quarterly listings – 25 at a total value of £4.4bn – since 2014, according to EY’s IPO report.

The professional services firm said the fourth quarter rally suggested companies had accelerated IPO plans to avoid volatility at the beginning of 2019.

London also dominated the international scene with 21 overseas companies listing in the City in 2018, more international IPOs than all the other major European exchanges combined.

Despite a strong final quarter, which ended 2018 with 79 London IPOs raising £9.5bn, the year was still down on 2017’s £12.4bn raised from 95 IPOs.

Aston Martin led the way with the year’s largest listing, raising £1.1bn of capital.

The luxury carmaker struggled on its debut and after opening with a share price of 1900p, closed the year at £1223.

But it wasn’t all bad news for newly-listed companies in 2018, as at the end of the year 43 of the 79 firms were trading above their offer price and first day returns were seven per cent above offer price on average.

EY predicted activity in the first quarter of 2019 would be subdued amid the ongoing Brexit negotiations and fears of a slowdown in global growth.

“Despite a fall in IPO activity, 2018 was still an encouraging year for the London market as it showed resilience in the ongoing geopolitical uncertainty and market volatility,” EY’s IPO lead Scott McCubbin said.

“The year finished with a flourish as the final quarter produced the highest number of main market listings in four years, which could be an indication that issuers had brought forward IPOs from 2019,” he added.