London IPO market slows to a crawl in 2023 as analysts warn ‘challenging’ times to come
London managed only five IPOs in the first quarter of 2023, raising just £81m as the City’s flagship exchange struggles to attract new participants.
The main market saw only two IPOs, from Dar Global and Streaks Gaming. The two IPOs raised a combined £63m, with £60m of that coming from luxury real estate firm Dar Global.
The Alternative Investment Market (AIM) saw three IPOs, raising a combined £18m of which £13m came from investment fund Onward Opportunities.
This was an 80 per cent fall compared to the same period last year when there were 19 IPOs which raised £400m. In the first quarter of 2021, £5.7bn was raised in UK markets.
EY’s Scott McCubbin commented: “The London IPO market continues to experience the extremely challenging conditions witnessed in 2022.”
McCubbin pointed to a series of macroeconomic challenges, such as the war in Ukraine, high commodity prices, and wider inflationary pressures for the poor performance. He suggested little would improve in the coming months.
“We expect the market to remain challenging for the next few months, albeit with some green shoots in the form of an expected reduction in inflation by the year-end. This should help see a return to a stronger equity market later in the year. However, this remains at risk given the continued uncertain geopolitical landscape,” he continued.
The data adds to an already bleak picture for the City which has seen a series of companies including ARM and building supplier CRH choose to list in other markets around the world.
According to figures from UHY Hacker Young, 2022 was already the worst year for new listings in a decade with only 41 companies listing on the main market. In addition, 82 firms delisted in the period.
A report from Canada Corporation last month suggested London had lost its position as the world’s undisputed financial centre, arguing that more needed to be done to encourage home-grown high-growth businesses to stay in the UK.
Responding to these pressures, the government and regulators are both attempting to boost London’s barren IPO market.
Last week the FCA set out its plans to “make the UK a more attractive place for business”. It hopes to secure “better outcomes for consumers and markets” by reforming the UK’s listing regime and an overhaul of consumer protections.
While London performed poorly, global IPO activity also slowed in the first quarter of 2023, with a 61 per cent drop-off in proceeds compared to last year. The Asia-Pacific region accounted for 59 per cent of global IPO deals.
As with the UK market, geopolitical tension, commodity and energy price rises and the impact of the turbulence in the global banking markets has led to a reduction in the number of IPOs.