London’s floats market sinks on political shocks

 
Billy Bambrough
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Metro Bank's float earlier this year was one of the biggest of 2016
Metro Bank's float earlier this year was one of the biggest of 2016 (Source: Getty)

The London IPO market will end the year on a subdued note, with total proceeds expected to be down by around 60 per cent compared to this time last year.

According to PwC’s latest IPO survey the London market raised £5.3bn across 60 floats throughout the year, averaging proceeds of £121m per listing.

The picture across Europe is almost as bleak with total annual proceeds down by approximately half, standing at €28.4bn (£23.8bn) and volumes down by around a quarter. The broad pull back has been blamed on a year of geopolitical shocks around the world spooking markets, including the UK’s vote to quit the European Union.

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There was a reduction in the number of withdrawn or postponed IPOs compared from last year however, falling to 34 compared to 61 in 2015.

“In the fourth quarter, London saw its largest IPO of the year with Convatec raising €1.7bn. The Convatec IPO was not without its obstacles as there had to be a compromise on price to get a deal done – a recurring theme during the second half of 2016,” said Lucy Tarleton, capital markets director at PwC.

Despite the lower level of IPO volumes in London this year, as with previous quarters, London’s junior market Aim has seen healthy activity levels, with a number of new companies still set to join the market before the end of the year.

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The accountancy giant was upbeat about the coming year for the listings across the continent, saying the IPO market remains open, with liquidity available for the right companies and at the right price.

“Investors will be looking at elections in France, Germany and the Netherlands, which have the potential to unsettle the IPO markets across Europe. Despite the uncertainty that this brings, the European IPO pipeline looks healthy. The pipeline of cross-border IPO activity is also beginning to build, with a number of international companies looking at listing in London,” said Mark Hughes, capital markets leader at PwC.

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