The London initial public offering (IPO) market hit a high unlikely to be repeated in 2016, research from accountancy giant PwC shows.
Ongoing market volatility, concerns over global growth, and a worsening oil price rout mean that more companies are expected to postpone or call off planned IPOs.
Vivienne Maclachlan, capital markets director at PwC, said: “This year, I would expect to see the number of companies coming to market to marginally decline, as investors continue to scrutinise investment opportunities and those that can wait, will wait.”
Last year was a record for IPOs in London, with billion pound valuations for the likes of Aena, ABN AMRO and Worldpay pushing the total higher than ever. Despite a record year, market and economic factors combined to wipe 16 per cent from IPO proceeds throughout 2015.
A whopping 61 IPOs were postponed or withdrawn in 2015, compared to 49 in 2014. A third (44) of those postponed in 2015 were due to market conditions.
Maclachlan added: “As we start 2016, a cold chill has descended across pretty much every market globally – this is certainly a more complex climate to that of 2015 and indeed 2014.”
Chancellor George Osborne has already put the sale of the remaining taxpayer-owned Lloyds Banking Group shares on hold due to the sinking price. There are however already several flotations lined up for the rest of the year.
CMC Markets, a spread betting company that previously planned a float in 2006 only to call it off due to the onset of the financial crisis, has announced it will come to market in coming weeks, priced at a level that values it at around £736m.
National Australia Bank will also seek to offload Clydesdale and Yorkshire Bank this year, despite being unlikely to get full price for it.
Mark Hughes, capital markets partner at PwC, said: “The IPO market will have to overcome the adversity of rock bottom oil prices, increasing interest rates and continued exchange rate volatility.”