London dominates IPO activity in Q3 with financial services taking centre stage

2 October 2017

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  • 30 IPOs in Q3 2017 raised a total of £2.9bn, making London one of the busiest IPO markets across EMEIA for the quarter
  • High number of cross-border deals points to global investor confidence returning in the UK
  • Year-end rally expected for AIM and small Main Market listings

The third quarter of 2017 saw a number of businesses bring their planned listing forward in order to take advantage of the current stable regulatory environment, according to EY’s IPO Eye released today. 

There were 30 IPOs on the UK Main Market and AIM in Q3 2017 that raised a combined total of £2.9bn in proceeds, making London the most active IPO market across EMEIA this quarter. The Main market saw14 floats raising £2.01bn, while 16 admissions in the AIM raised £916m. So far there have been 12 cross-border deals in the first nine months of 2017, which accounted for 24% of UK IPOs, representing 56% of the total UK proceeds.

The financial sector continued to dominate IPOs this quarter, with 16 floats, confirming London’s continued presence as a global financial hub. According to the Eye, investor interest is being driven by the quality of the FTSE performance against the low value of the pound, making UK investments of particular interest to international investors.

Only one IPO this quarter was PE backed, which listed on AIM raising £190m. The low level of PE-backed activity is indicative of the weak performance of the main market listings outside financial services, the report says.

Scott McCubbin, EY’s IPO Leader, comments: “Activity in the third quarter saw a significant uptick, with the financial services sector looking to take advantage of the currently stable regulatory environment. Cross border listings are also staging a return, indicating that the UK market’s attractiveness as a listing venue globally is on the rise.

“However, it is still a source for concern that outside the real estate and financial services sectors, businesses in the main market and, to a slightly lesser extent, AIM, are still finding it difficult to achieve their desired pricing. Until we see the return of strong local main market listings, the UK IPO market’s full recovery is far from certain.”

Q4 2017 looks set to be the most active quarter of the year

Scott McCubbin, concludes: “Overall, we expect that Q4 2017 will be the most active quarter of the year with the pipeline looking strong for AIM and small Main Market listings, both areas that have been largely unaffected by events in the wider economy. However, until the pound stabilises and there is greater certainty and clarity regarding the process and terms of the UK’s withdrawal from the EU, we will not see a full recovery of the UK IPO market, particularly of local listings on the main market.

“London is set to mirror global IPO activity, which in 2017 is on course to be the busiest year since 2007 with an estimated 1,600 to 1,700 IPOs raising US$190b to US$200b, as a result of rallying markets and low volatility, strengthening investor sentiment.

“Looking across the border, IPOs in European markets should be relatively strong going into the last quarter building on a relatively healthy economic environment, rising equity markets and confidence across the region. The last quarter of 2017 and the first half of 2018 should, also, see further megadeals across the region, especially in the Middle East.”