Belfast Telegraph

Money raised from new listings estimated to have dropped 60%, says new data

The amount of money raised from new stock market listings in London this year is thought to have dropped 60%, according to new data.

Estimates released by professional services firm PwC pointed to a slowdown in the initial public offerings (IPO) market, with the number of company flotations on the London Stock Exchange (LSE) dropping 35% in 2016, compared with a year earlier.

Overall, PwC data shows that the European IPO proceeds halved in 2016 to 28.4 billion euros (£23.9 billion), while 34 flotations were withdrawn or postponed this year.

UK stock market listings have struggled to get off the ground since the Brexit vote, with TI Fluid Systems cancelling its IPO and waste management firm Biffa slashing the price of its flotation.

Fitness chain Pure Gym said market volatility was to blame when it scrapped plans for its stock market debut in October.

Software firm Misys pulled the plug on its flotation on similar grounds, citing "market conditions".

However, London ranked as one of the top three exchanges in Europe for raising the most cash from IPOs.

Medical products firm ConvaTec - which was the largest UK flotation this year - raised proceeds of 1.7 billion euros (£1.4 billion) when it went public at the end of October.

Lucy Tarleton, Capital Markets director at PwC, said: "The ConvaTec IPO was not without its obstacles as there had to be a compromise on price to get a deal done - a recurring theme during the second half of 2016.

"Despite the lower level of IPO volumes in London in 2016, as with previous quarters, AIM has seen healthy activity levels, with a number of new companies set to join the market before the end of the year."

London raised 6.4 billion euros (£5.4 billion) through 60 IPOs, compared with Sweden's Nasdaq Nordic which raised 7.7 billion euros (£6.5 billion) across 69 IPOs, and Germany's Deutsche Borse which raised five billion euros (£4.2 billion) through 11 IPOs.

Mark Hughes, Capital Markets leader at PwC, warned that elections in France, Germany and the Netherlands next year could potentially "unsettle" IPO markets across Europe.

"Despite the uncertainty that this brings, the European IPO pipeline looks healthy, as investors seek out investment opportunities with compelling and well-supported equity stories.

"The pipeline of cross-border IPO activity is also beginning to build, with a number of international companies looking at listing in London.

"As a result of the current economic and political outlook, investors will continue to be more selective, backing IPO candidates with an attractive valuation, a differentiated product and an equity story which is underpinned by strong performance."