Despite ongoing uncertainty in relation to COVID-19 and wider market volatility, analysis from KPMG’s UK Capital Markets Advisory Group has confirmed that 2021 has been a bumper year for UK IPOs.
A total of 108 companies have come to market in London so far in 2021, more than 2020 (38) and 2019 (35) combined.
London’s Main Market has thrived, with 53 companies listing in 2021 to date, the most in any year since 2017. Furthermore, following a recent period of suppressed volumes, AIM IPOs have dramatically increased over the last year, jumping from 16 in 2020 to 55 in 2021, the highest number of market debutants since 2014. Helping to drive this trend is the pent-up investor demand which has built over the COVID-19 period for attractive IPO candidates, as well as generally strong equity market conditions.
Linda Main, Head of KPMG’s UK Capital Markets Advisory Group, said: “As the UK, once again, enters increased COVID-19 related restrictions, the course of the pandemic continues to cause uncertainty for all. However, 2021 proved that investor demand for new equity issues remains incredibly resilient despite these unknowns, and the IPO pipeline suggests this trend will carry forward into 2022.”
“One key focus point during 2021 was the aftermarket performance of IPOs. Our analysis shows post-IPO performance widely diverged by company with 39% of large listings recording share price drops, compared to only 13% of equivalent companies in 2019 (the most recent comparable year). Generally, where share price performance has disappointed, it can be attributed to company-specific factors, therefore, companies looking to IPO should not be put off.”
Meanwhile, Further Issue fund raises experienced a reduction year-on-year – down 29% to £24.5 billion. However, they were still up on 2019 levels (£15.7 billion), with many companies raising cash to chase growth opportunities rather than to simply ensure survival.
Linda Main added: “Funds raised through Further Issues reached record levels (£34.3 billion) during 2020, as listed companies tapped into their investor base to access liquidity during uncertain, and for many, challenging, trading conditions. 2021 saw a partial return to normality, with Further Issues considerably lower year-on-year, and whilst a number of businesses continued to raise funds to support survival and recovery, others identified opportunities to invest in organic and inorganic growth.”
In terms of key sector activity, Financial Services and TMT dominated, with IPOs in the Financial Services sector accounting for approximately 35% of total Funds Raised. This was largely driven by the market debut of 19 funds or investment vehicles, compared to only nine and six in 2020 and 2019 respectively. TMT also accounted for almost a third (32%) of total Funds Raised. Most notably, Deliveroo was this year’s largest IPO, raising £1.5 billion and opening with a market capitalisation of £4.9 billion.
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