For a little over a decade now, the London IPO scene hasn’t been that great. The uncertainties of the UK’s controversial decision to leave the EU further aggravated the already unfavourable state of the IPO market since 2016.
Fortunately, things seem to be finally turning out for the better. After experiencing a long pause in the first half of 2020 due to the pandemic and plummeting retail sales, activity started to re-emerge, steadily pick-up, and experience a significant uptick in the last quarter.
In fact, over the fourth quarter of last year, London’s main market saw 17 listings raising £3.4 billion. Simultaneously, the junior index AIM, which has long been considered an attractive option for newer companies, also showcased favourable results with 10 IPOs, compared to just three in the third quarter. And for investors hungry for new IPOs, 2021 is set to be even bigger.
Today’s the long-awaited renaissance of home-grown IPOs can be attributed to the lifting of the cloud that had loomed over the Brexit deal and the hopeful economic revival post-pandemic. As Erik Anderson, head of corporate broking at investment bank Panmure Gordon, describes, “Brexit has improved listing sentiment for domestic issuers as it is a material uncertainty out of the way, finally, and people can see a way through the coronavirus crisis now.”
In November, the UK Treasury also released its listings review, designed to encourage more tech companies to launch IPOs in the country. This holds much promise not just for tech businesses, but also for investors looking to cash in. One of the most compelling success stories for investing in IPOs, after all, is the Chinese e-commerce company Alibaba, whose offering share price was at $68 (£49.52). It closed its IPO at $98 (£71.37) per share and reached as high as $195 (£142). Here in the UK, e-commerce technology platform THG raised £1.88 billion and closed their IPO round at £5.4 billion just last year, and by the looks of things, this year’s tech IPOs are setting their sights even higher.
The IPOs to watch out for
As the London IPO scene continues to gain tech companies’ interest, there are definitely a few enterprises that investors should watch out for. For instance, there’s Transferwise, which serves over nine million customers and is said to process £4.5 billion in cross-border payments every month. Another company to look forward to is Darktrace, which was the first company to develop a cybersecurity platform driven by AI. Cambridge’s trailblazing company has settled on a London IPO that will value the business at a staggering $5 billion (£3.63 billion).
Due to the boom of eCommerce, delivery companies like Deliveroo and online card and gift retailer Moonpig are also organisations that would be worth paying close attention to. Deliveroo is set to go public in the first quarter of 2021 and, it is estimated that it could list at a value of anywhere between £2.5 billion to £4 billion.
On the other hand, after going public this February, Moonpig’s share price already surged by 25% to £4.40 less than an hour after trading. The famous online card firm will be offering around 5.7 million new shares to raise gross proceeds of approximately £20 million, on top of about 134.6 million existing shares for a total offer size of £491.2 million.
Without a doubt, the London IPO scene is looking to enjoy bigger and better days ahead, with many even calling it the start of the golden UK Tech decade. For more UK and international updates, do be sure to check out our site.