London’s IPO market proves resilient despite choppy conditions
Despite rocky conditions caused by Covid-19 and Brexit-related uncertainties, the London Stock Exchange (LSE) retained its title as Europe’s most active market this year.
LSE proceeds have accounted for almost a third of total European proceeds in 2020. So far there have been 26 London IPOs this year, which is in line with 2019’s 27. With a small number of IPOs still due to complete in December, 2020 is likely to outperform 2019.
Financials and industrials were the largest sectors for London in 2020, respectively raising almost £2.7bn from 11 IPOs and £2.6bn from 6 IPOs year-to-date .
THG Holdings, which owns a variety of brands including Look Fantastic and MyProtein, was the largest IPO listed in London this year so far, having raised £1.9bn. Looking ahead to next year, ecommerce, technology and financials, along with the renewables sector, are likely to be particularly active.
PwC capital markets partner Mark Hughes said: “Looking ahead, the strong finish to the year is building a solid pipeline for 2021. Critically, we are also seeing progress on the Covid-19 vaccine rollout and should soon have greater clarity on the future of the UK-EU trading arrangement, both of which provide a positive backdrop to the IPO markets as we head into 2021.”
Despite the backdrop of Brexit, London has continued to attract cross-border IPOs, such as share offerings by Kaspi.kz, a Kazakhstan fintech firm, and Lithuanian utilities company AB Ignitis Grupe..
London is also the largest exchange in Europe for further offers, raising £41.2bn this year – approximately 17 per cent of Europe’s total.
The relaxation of rules allowing UK companies to raise up to 20 per cent of their issued share capital without offering pre-emption to shareholders has boosted the market for further offers.
Following a period of companies strengthening their balance sheets earlier in the year, some more recent further capital raises have supported increased M&A activity.
PwC capital markets director Lucy Tarleton added: “Further offers have featured prominently in UK capital markets activity in 2020, however it’s positive news that amid the uncertainties, London has proven to be a resilient market for IPOs. Despite a subdued start, we’ve seen activity pick up towards the end of 2020 – especially in Q4 – and expect a strong finish to the year.”