London dominates the IPO market as financial services sector shines


Sterling's drop may not be welcome news for holidaymakers or UK-based importers, but it has contributed to booming initial public offering (IPO) market in London, according to a new report from EY.

In the third quarter of this year, more businesses floated on the London Stock Exchange than any other bourse across Europe, the Middle East, India and Africa, EY revealed today in its IPO Eye.

Investor interest is being driven by the quality of the FTSE's performance against the low value of the pound, the report said, as cross-border IPOs accounted for 12 per cent of the listings and represented 56 per cent of the £2.9bn proceeds.

Read more: London's IPO market expected to accelerate after "slow and steady" start to 2017, with billions in the pipeline

"The resilience of London's IPO market reinforces the City's position as the most international financial centre, open and ready for business," said Marcus Stuttard, Head of Aim and UK Primary Markets at the London Stock Exchange Group.

"London Stock Exchange Group's diverse, deep and liquid pools of capital support the funding, growth and innovation of companies from the UK and around the world."

There were 30 London IPOs between July and September, with 14 on the main market raising £2.01bn and 16 its smaller sister market Aim generating £916m.

Financial services dominated the quarter, claiming 16 of the floats. But EY has noted that performance in other sectors is troublingly poor.

“It is still a source of 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,” said EY's IPO leader Scott McCubbin.

“Until we see the return of strong local main market listings, the UK IPO market’s full recovery is far from certain.”

Read more: The London Stock Exchange is shrinking: Why the capital needs to float more IPO boats

There was only one private equity-backed float in the quarter, which the report said is indicative of this weak performance outside financial services.

However, the final quarter is set to be even stronger than the third, according to EY, with a solid pipeline of Aim and main market listings ahead.

London should be able to mirror global IPO activity, which is approaching its busiest year in 2017 since 2007. An estimated 1,600 to 1,700 are estimated to take place, raising between $190bn (£142bn) and $200bn, supported by rallying markets and low volatility.

Read more: Alfa float: London Stock Exchange set for £1bn IPO, its biggest of 2017 so far

Full story: London dominates the IPO market as financial services sector shines: City A.M.

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