Firms ‘staying private for longer’ as listing drought set to continue, Baillie Gifford says
British businesses are set to stay “private for longer” as a drought in IPOs shows no sign of coming to an end, an investor at Baillie Gifford has warned.
Pater Singlehurst, head of private company investments at the Edinburgh-based business, said investors would need to regain trust in companies looking to list before any signs of revival in London floats were likely to materialise.
Singlehurst warned investor faith in IPOs had been sorely damaged by a spate of 2021 flotations in which share prices sunk soon after.
That includes the likes of Trustpilot, Deliveroo and Alphawave, all of whom saw their shares at least halve in value within a year of joining the London Stock Exchange.
Singlehurst told the Times many private companies eyeing an IPO do not appreciate “how burnt public market investors feel from 2021.”
“Put yourself in the shoes of a public market investor looking at an IPO. Why would you look at a company where you get two years of financial data – that is potentially on a very high valuation – when you could be looking at all these public companies, many of which were public in 2020 and 2021 and that maybe [markets] still haven’t got around to fully digesting, where you have a longer operational track record [and] prices that are pretty stabilised?
“Until the public markets have a clear articulation of what that utility is, you will continue to see companies staying private for longer.”
Secondary share sales
Singlehurst’s remarks come as Baillie Gifford produced analysis showing that just two US tech firms – payments business Stripe and analytics firm Databricks – have recently been able to raise more capital through secondary private share sales than the whole tech sector managed via listings.
Meanwhile, amid a dearth of London Stock Exchange IPOs, London continues to lead Europe on secondary or follow-on fundraising.
In 2024, London’s stock exchange fell to 35th in the world for money raised from IPOs, bringing in $576.7m (£459m), just 0.53 per cent of the global market.
However, when including follow-on fundraising, the UK shot up to fifth as the country raised $28bn (£22bn) across 73 issues, a 53 per cent increase from 2023.
This included two $3bn follow-ons from Haleon, both of which were among the top ten largest follow-ons globally in 2024.