Saturday, 18th May, 2024
Saturday, 18th May, 2024

London stock market facing blockbuster IPO year

London will enjoy a very strong year for
stock market flotations, analysts say, arguing that both Brexit and
coronavirus offer firms a unique opportunity to expand.

Various big-name businesses that have seen booming online demand from
home-bound customers during Covid-19 lockdowns have revealed eye-catching
plans for initial public offerings (IPOs) in recent weeks.

Clarity over Britain’s final departure from the European Union on January
1 acted as a catalyst for many companies to raise funds, according to
specialists, while the rollout of Covid-19 vaccines also soothed investor
concerns over the deadly pandemic.

So far this year, the celebrated shoemaker Dr Martens, app-driven meals
delivery service Deliveroo and online greetings card seller Moonpig have all
outlined plans.

– Confidence continues to build –

“Looking to the year ahead, we can expect 2021 to be a very strong year
for the UK IPO market,” said Scott McCubbin at London-based financial
services giant EY.

“An uptick in IPO activity may well intensify the competition for
investment, placing greater emphasis on preparing early for IPO and raising
profile with investors.

“Confidence continues to build with the Brexit deal now giving clarity
around the future relationship with Europe and the rollout of Covid-19
vaccinations.”

Added to the mix, online money transfer specialist TransferWise has
reportedly appointed banks to coordinate a planned float.

British media report that others could include insurer Canopius, EDF-owned
electric vehicle charging business Pod Point, and online fashion retailer
Very.

The IPO market has also attracted interest in recent years due to the
easier availability of financing, alongside ultra-low interest rates.

– ‘Ideal for IPOs’ –

“Over the past few years we have also seen a strengthening in the
financing available for UK and European companies in the early stages of
their growth,” said Marcus Stuttard, head of UK primary markets at the London
Stock Exchange.

“This means that there are now an increasing number of dynamic businesses
at the stage and size of development that are ideal for an IPO.

“These factors coming together have contributed to the strong IPO pipeline
we are seeing at the start of 2021,” he told AFP.

At the same time, investors have lots of cash, owing to low borrowing
costs and several billion pounds worth of central bank stimulus funds.

London thus hopes to steal a march on rival IPO destinations such as
Frankfurt, Hong Kong and New York.

Britain ranked only behind China and the United States in terms of the
total amount of cash raised on the stock market last year, according to a
recent EY study.

The British capital represented more than 40 percent of the total IPO
amounts raised in Europe.

Brexit could deliver a further boost because the government wants to relax
certain stock exchange regulations as it seeks to attract more big-name
businesses to list.

The Brexit trade deal, which took effect on January 1, did not encompass
the finance sector — but Britain and the EU aim to seal a memorandum of
understanding about financial services by March.

The City of London Corporation revealed Friday in a study that the British
capital still trails the United States and Hong Kong in attracting foreign
company listings.

London now wants to compete more effectively against European rivals and
EU officials are concerned it could dump highly-prized standards.

Catherine McGuiness, policy chair at the City of London Corporation, said:
“The competitive strengths of London and the UK should mean that we are well
placed to seize opportunities as we start a new trading chapter outside the
European Union.”

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