Despite a flood of flotations earlier this year the appetite for companies to list this year is waning.
Despite London breaking records for the recent flood of company flotations, the listings year is expected to “end with a whimper”, according to new forecasts by PwC.
The number of companies actively considering listing on the London Stock Exchange before Christmas has dwindled, as investor sentiment has weakened following choppy trading.
The UK flotation flurry saw 66 companies list during the first nine months of the year, double last year’s number and raising £12.2bn – more than four times the value for 2013.
Challenger banks Aldermore and Virgin Money, along with luxury shoemaker Jimmy Choo and British Car Auctions, have already formally announced their intentions to float and are expected to debut by the end of the month.
However, this new clutch is far smaller than expected.
There are 10 initial public offering (IPO) expected in London above £150m by the end of this year, raising around £1.5bn to £2bn, with total value of £2.5bn to £3bn, according to PwC. This is comparison to last year when £6.8bn was raised in the same quarter last year by 11 companies.
“While investors supported a flood of listings at the start of the year they are now placing much more of an emphasis on valuation so only opportunities that offer genuine value supported by robust earnings will achieve listed status”, said Dru Danford, chief executive of Shore Capital. Housebuilder Miller blamed market volatility for scrapping its float earlier this month, just two weeks after announcing IPO plans. September was also exceptionally quiet for flotations, despite being traditionally one of the busiest months for listings following the summer lull. This was in part due to nervousness created by the Scottish referendum, which caused companies and their advisers to wait-and-see in case of a Yes vote, which would have had a far-reaching economic impact. As a result there were only three flotations above £150m in the third quarter of the year, which raised a total £1bn. “Essentially this is finishing the year with a whimper rather than a bang,” Vivienne Maclachlan, PwC director of capital market said. “That is not to say that the pipeline is not good – both for Aim and the main market- but we think that pulled transactions such as Miller and also a burgeoning M&A market ahead of proposed interest rate hikes and year ends may mean that a number are pushed into next year”.
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