The London Stock Exchange has just recorded its best first-quarterly performance since 2007, according to the latest data from EY.
Fundraisings in the three months to March reached £5.6bn, more than half of the £9.4bn raised in the whole of 2020.
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Total funds raised in 2021’s first quarter were the largest of any opening quarter since the £5.8bn of new money raised in 2007 and the most raised in any quarter since the £6.9bn raised in the second quarter of 2014, the financial services firm said.
The performance during the first three months of 2021 is in stark contrast to the same period in 2020 when there were just three IPOs on the main market and two on AIM, which raised a combined total of £615m – a value nine times lower than this year’s opening quarter.
Both the main market and AIM have built on the resurgence of activity seen in the second half of 2020 with 12 IPOs raising £5.2bn on the main market and eight IPOs raising £441mln on the junior segment.
Confidence in London was boosted by private equity firms: three PE-backed IPOs accounted for 41% of total funds raised in the quarter, led by Dr Martens PLC’s (LON:DOCS) £1.5bn float.
A global look
The £5.6bn of new money add to £9bn in secondary fundraisings, which means that companies already listed have tapped investors for extra cash.
It makes 25% of total follow-on funds raised across Europe, Middle East, India & Africa in the first quarter this year, EY noted.
Global IPO markets have had the best start to the year in over 20 years with more than US$65bn being raised in over 300 IPOs.
This excludes US-focused Special Purpose Acquisition Company listings, which have raised over US$90bn in the quarter compared to US$80bn in the whole of 2020.
Tech stocks have proven to be the most popular: the Nasdaq was the leading global exchange, hosting 46 IPOs worth over US$18bn.
UK wants the tech, too
Remaining in the sector, the government has released a review of the UK listings regime to remain competitive compared to global exchanges.
“Given the tech sector is of increasing importance for both the IPO market and wider economic growth, the UK’s ability to attract tech IPOs is likely to be under scrutiny,” commented Scott McCubbin, EY Partner and UK&I IPO Leader.
“The reputation of the UK as a tech IPO market will in part depend on the performance analysis of listings that fall within this broad sector, which includes both traditional tech companies and those that heavily rely on technology. Investors will be looking carefully at a range of factors with a keen focus on issuers’ business models, governance and use of proceeds – all indicating that robust preparation is key to a successful IPO.”
“Such a positive performance in the first quarter shows confidence in the strong fundamentals of the UK IPO market. While some believe there is a risk of compromising on current strengths if the UK seeks to adapt to bolster its tech status, the UK would likely have to make some significant changes if it were to rival the US in this area.”