Royal Mail listing set to kick-start UK IPO market

The UK Initial Public Offering market is expected to reach £7.2 billion during 2013, research from Capita suggests.

A marked improvement in the state of the Initial Public Offering (IPO) market has been noted, as figures continue a slow upward trend.

Compared with 2006, when £25.6 billion of shares were sold through 307 IPOs, the market is still in recovery – but the pipeline of new market entries is growing, Capita says.

Research compiled by the firm shows that between 2004 and 2007, 1,156 companies listed – netting £67.2 billion. In 2009, the worst 12 months of stock market activity occurred when 13 businesses raised £600 million.

Justin Cooper, CEO of Capita Registrars, comments, ‘With the FTSE All-Share near all-time highs, and economic recovery slowly beginning to take hold, company managers can command higher valuations for their firms and will bemore confident about becoming listed entities.

‘It takes several months to plan a listing so the deal pipeline will now be filling nicely.’

Capita cites possible deals such as the Royal Mail float as an example which will be a pipeline filler. The first half of 2013 saw the domestic market contribute £1.8 billion, while the international market and the Alternative Investment Market (AIM) brought in £724 million of new listings.

Further results from Capita’s study shows that 95 per cent of all IPOs since 1998 to present day jointly raised 41 per cent of the total £151.8 billion – the surplus 100 deals collectively netted the remaining 50 per cent.

‘A healthy IPO market is crucial to the long-term functioning of the economy and the financial system.

‘Companies tend to mature and fade over time, or get taken over and delisted, so new blood is necessary to provide pension funds, insurance companies and private investors with places to put their money.’

A number of positive developments on the AIM market have been reported in recent months. With the number of companies leaving the junior exchange dropping to a seven-year low, the cost for businesses to list also fell for the first time over the same period.

Research conducted by UHY Hacker Young in June revealed that the cost was down to 8.4 per cent of all funds raised.

AIM is also beginning to attract fast-growth technology companies which are choosing to forgo the tradition venture capital route. New listees including WANdisco and blur Group have posted solid numbers since joining.

Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for GrowthBusiness.co.uk from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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