David Buick says inflation concerns are dampening stock market expectations, but 2021 has proved to be a good year for the City of London to float.
An investor who took an equal stake in just 70 UK IPOs this year would get a return of 42 per cent, says a seasoned Citi commentator currently on the Aquis exchange.
He takes a look at why floatations are back in London and there may be more to come.
Wix was ousted from Travis Perkins and listed separately on the stock exchange this year
Equity markets have been witnessing extreme volatility at times, which suggests that valuations are starting to get a bit foamy and rich for the blood of some investors.
There is a degree of neurosis that has caused investors to take some of the risk off the table.
Global markets are smelling of fear, which may lead to a slight correction in the coming weeks.
Inflation, supply chain disruptions and the refusal of Covid to return are major causes for concern.
However, it is time to reflect on how well the City of London has competed for IPOs domestically and internationally so far this year.
Demand has stalled for more than five years now since the Brexit vote, where the UK equity market has become an unattractive place to raise capital.
The absence of big American names is an act of hollowing out the specialized capital-raising ability among large multinational banks.
Raising money in the mid-cap space requires a deep understanding of the institutional investor base.
If investors had taken an equal stake in over 70 UK IPOs this year, they would currently be sitting on a return of 42 per cent – 4 times more than all FTSE shares.
This is a particularly good effort, as there is no doubt that writing off debt through private equity is a cheaper way to raise capital than through capital markets or initial public offerings.
Despite all the apprehensions about Brexit and allure crimes like President Macron trying to lure business from London to Paris, or Amsterdam or Frankfurt, the ‘City’ has given an excellent account of its own accord this year.
There is an urgent need to reform regulation to make it simpler and easier to raise capital in the UK.
The UK’s new freedom to deviate from EU financial regulation, will eventually provide an opportunity to create a regime that does.
The UK has lost a few IPOs to New York and most recently Universal Music’s successful €30 billion floatation, which went to Amsterdam this week at a 35 percent premium.
Despite those disappointments, London remains stagnant.
Deliveroo’s IPO was one of the most high profile in London this year and was seen as a significant event due to its tech star status.
Above all, ‘City’ provides excellent legal advice. UK law is omnipotent on a global basis and there is no doubt that this ‘jewel in the crown’ has been extremely beneficial to advisory banks.
City commentator David Buicki
There is no doubt that Javier Rowlett and his team really put London on the map as a major force during their tenure as CEO of the London Stock Exchange between 2009-2017. Its share price rose from 635p to 3,646p – 474 percent.
Today the London Stock Exchange is in the hands of David Schwimmer and its share price has risen to 7,974p!
I salute the efforts of the main exchange, its AIM arm and the Aquis Stock Exchange, for whom I do some work.
The success of the US and European investment banking titans in recent months is considered a read.
However, Numis, Peele Hunt (soon to go for their own IPO), Panmayor Gordon, Canaccord, Robbie Warshaw, Sencos, Librem, WH Ireland and many others in their mid-cap advice to ‘catch the nettle’ should go for. Small cap clients go for floatation as well as provide other types of finance for economic recovery.
Bridgepoint, Wise, Darkforce, Mothercare, Moon Pig, Dr. Martens, Made.com and Wix were among the successful core market debutants.
Shares of Deliveroo sank after its IPO, but then went on a strong run since early August before slipping back — they remain at float value, though.
Deliveroo’s £8 billion IPO got off to a rough start, losing 25 percent of its value initially, but it has recovered and is up 10 percent from its issue price.
There is more to come in the next few months. EG Group, Oxford Nanopore Technologies, Jaguar Land Rover, Brewdog, Monzo, Starling, McLaren Group and Virgin Atlantic are considering open options for themselves, assuming market conditions remain favorable – often a key to IPO success. !
Equis Stock Exchange, as an alternative to the established LSE/AIM market, has been responsible for 17 IPOs this year.
Equis Stock Exchange differentiates itself through its affiliation approach, its fair regulation and straightforward process with companies and advisors, thereby saving time and money.
Aquis is also unique in banning short-selling (for the added protection of our growing businesses) and its market-making plan, which targets a 5 percent spread and has a spread of over 50 percent so far in our growth market. has gone. Equis believes that being able to take exposure to retail investors is critical to improving liquidity and shareholder register.
Recent AQSE IPOs include China-focused e-commerce business Samarkand and boutique investment bank VSA Capital Group.
The City of London is alive and kicking.