Though UK IPOs are showing some signs of frothy prices, the deals keep coming. IPOs in the UK so far this year (58 deals worth $13bn in total) have almost matched the total value of last year’s new listings. The key difference to last year is that IPOs are being priced at the lower end of their ranges due to concerns over market valuations. Many issuers have been retailers, such as Poundland and Pets at Home, with deal sizes typically at the smaller end – up to $100m. However, whereas last year’s UK IPOs appreciated on average by 16 per cent by year end, this year has been more challenging, with shares down by five per cent on average since listing. This contrasts with the US, where average IPO gains have been ten per cent, and also lags the four per cent gain achieved across the rest of the world. Amid the UK IPO fever, concerns have emerged that investors may be suffering from flotation fatigue. Fat Face, the retailer, pulled its planned London flotation after citing weak economic growth and doubts as to whether it would raise the funds it was seeking. Other deals press forward at the low end of their valuation range, albeit still on a higher multiple of earnings (PE) than the London market average. London remains an attractive market on which to list shares, reflecting the UK’s attractive corporate tax rate and the London market’s liquidity and proven track record. Investors may be more wary of valuations, but a flurry of upcoming deals led by Zoopla, Wizz Air and River & Mercantile confirm that investor appetite remains. James Butterfill is Global Equity Strategist at Coutts.
We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept”, you consent to the use of ALL the cookies.
This website uses cookies to improve your experience while you navigate through the website. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may have an effect on your browsing experience.
Necessary cookies are absolutely essential for the website to function properly. This category only includes cookies that ensures basic functionalities and security features of the website. These cookies do not store any personal information.
Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. It is mandatory to procure user consent prior to running these cookies on your website.