With just over three months left of the year, 2013 has already been a bumper year for stock market flotations.
Statistics from the London Stock Exchange show that money raised so far this year via new listings on the main market totals £3.21bn, versus £1.89bn for the whole of 2012.
The number of flotations – or IPOs (initial public offerings), as we are expected to call them in this TLA (three letter acronym) obsessed world – on the main market has not yet surpassed the number seen in 2012, but it is on course to do so. In 2012, there were 27 new listings, equivalent to 2.25 a month, whereas this year the current total is 21, equivalent to 2.625 a month.
Seven flotations this year have raised more than £200mln in new capital: Esure (£604mln); Partnership Assurance (£485mln); Renewables Infrastructure (£300mln); Greencoat UK Wind (£260mln); Crest Nicholson (£225mln); Hellermannyton Group (£212mln) and Countrywide (£204mln).
While the new issues market has been thriving on the big board, the junior market – AIM – took a bit longer to get into its stride, but made up for lost time in July.
A report from small cap specialist Allenby Capital indicates that £474.3mln was raised on AIM in July, of which £214.6mln was from new issues.
This was the highest amount raised on the junior market since June 2011 and was up 243% year-on-year and 111% month-on-month.
For the year-to-date, there have been 48 flotations on AIM, equivalent to an average of 6 per month, a fraction below last year’s average, when there were a total of 73 IPOs on AIM.
The money raised so far in 2013 is £530.3mln, equivalent to just over £66mln a month. In the whole of 2012, a total of £712.1mln was raised, according to the London Stock Exchange’s figures, equivalent to just under £60mln a month, so the average amount being raised from each flotation is showing a healthy increase.
The biggest AIM flotation this year, in terms of new capital raised, has been Weiss Korea Opportunity Fund, where the company came to market after a placing generated £105mln.
The highest profile flotation on AIM, however, has probably been Conviviality Retail (LON:CVR), the company behind the Bargain Booze off-licence chain.
The AIM market also seems to be attracting the attention of games development companies, as well. Computer games business Keywords Studio (LON:KWS) raised £28mln through its listing, and was valued at around £60mln on its first day of trading.
Cambridge-based games developer Frontier Developments (LON:FDEV) started trading at a premium on July 15 after it raised £4mln through a placing.
Meanwhile, mobile gaming services provider 24/7 Gaming Group (LON:247) raised £9.2mln through a placing at a price that valued the Dutch company at the time of list at £79mln.
“We have continued to see a good flow of AIM IPO opportunities in 2013, a number of which we have backed through Octopus funds," said Paul Stevens, fund manager on the Smaller Companies team at Octopus Investments.
"Companies from a range of sectors have successfully floated this year, but it is perhaps inevitable that technology businesses in particular continue to find AIM an attractive home, as they look to repeat the success of companies such as WANdisco plc (up 520%) (LON:WAND) and Blur Group plc (up 291%) (LON:BLUR) since they floated in 2012,” Stevens noted.
Coming down the turnpike, we have AIM debuts expected from Arricano Real Estate, a developer and operator of shopping centres in Ukraine, and NetScientific, a medtech company treading the much-travelled route of commercialising research and technologies developed by leading universities.
“The outlook for the AIM IPO market remains positive, not least as a result of the government’s continued support of smaller companies. The recent change to the ISA rules, which now allow investors to hold individual AIM shares in their ISA, has led to a marked increase in trading volumes on AIM. It remains to be seen if this will be sustained but the early signs are encouraging, and increased liquidity certainly adds to the appeal of AIM as a platform for smaller companies to come and raise capital,” Stevens claimed.
“On top of that, the increasingly positive outlook for the UK economy provides a better backdrop for companies to seek funding on a public market like AIM. The early success of companies that have chosen to list on AIM already this year, such as Quixant (+101%), Keywords Studios (+25%), and most recently CentralNic (+24%), is attracting interest from other companies considering various sources of capital which, in turn, should create more exciting investment opportunities for investors on AIM,” he added.