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Stock market listings predicted to recover after post-Brexit slump

Published 03/10/2016

The stock market was shaken by the Brexit vote
The stock market was shaken by the Brexit vote

UK stock market listings are expected to bounce back after a post-Brexit summer slump, according to a new report.

Figures released by accountancy giant EY shows that only six initial public offerings (IPO) took place in the third quarter, down from 13 in the previous quarter, but in line with the same period last year.

EY said the EU referendum "compounded the so far slow 2016 IPO market", which saw only two listings on the UK's main market, raising a total of £183.3 million over the past three months.

The largest main market IPO was bowling alley operator Hollywood Bowl, completed during the final weeks of September.

The other four IPOs saw companies list on London's AIM market, raising a total of £42 million.

Only one listing was for a foreign company - with Italian media and entertainment business SEC SpA raising £3.4 million - "reflecting the international implications of the Brexit vote", EY said.

A report released by professional services firm PwC last week also noted a drop in the number of new listings on the London stock market as a result of the Brexit vote, highlighting that there were no main market IPOs above £5 million in the 13 weeks following the referendum.

However, EY says higher valuations and lower volatility could spark a pick-up in IPO activity going forward, adding that a return to the record levels of 2014 "may be a stretch", but the number of IPOs throughout 2017 could surpass the 2015 total.

Reports suggest that firms including Premier Asset Management, and the UK arm of doughnut company Krispy Kreme are exploring UK flotations.

Meanwhile, companies like Pure Gym, waste management firm Biffa, and GoCompare have already announced plans to IPO.

Scott McCubbin, EY's IPO leader for UK and Ireland, said: "Following the markets' strong recovery and the added interest of US and Asian investors looking to take advantage of the weak pound, we now expect a number of firms to dust off their IPO plans."

He suggested that retail, technology, media and entertainment companies are likely to attract the most investor interest.

Mr McCubbin added: "We could well see a resurgence of IPOs in 2017, as firms look to take advantage of global investor interest in the UK market."

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