Value of London stock market floats triples in second quarter as large caps return with a bang

Jasper Jolly
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An Allied Irish Bank branch is pictured
The float of Allied Irish Banks was the largest in Europe so far this year (Source: Getty)

Proceeds from London stock market floats more than tripled in the second quarter of the year, a new study published today shows, as investors lapped up share offers from big companies.

Initial public offerings (IPOs) from 18 companies raised £4.2bn over the period, according to a study by accountants EY.

While there was only one more IPO than the previous quarter, the money raised by the floats easily surpassed the first-quarter total of only £1.2bn.

The top float was Allied Irish Banks, which raised £2.62bn for the Irish government, followed by haulage firm Eddie Stobart and bank tech firm Alfa Financial Software, which raised £393m and £250m respectively.

Read more: Allied Irish Banks ties up IPO with €12bn valuation

Investors were rewarded handsomely for their bets, as floats on London’s main market enjoyed an average 12.9 per cent first-day bump in the value of their stock, EY reported.

The British IPO market has been boosted by a stronger global economic environment, despite currency volatility and ongoing political uncertainty in the UK after the shock General Election result last month.

This year there were more stock market floats globally in the first half than in any year since 2007, before the financial crisis.

China led the way by number of floats worldwide, with Shenzen and Shanghai accounting for 33 per cent of all IPOs in the first half of the year as authorities sought to make IPOs easier as the country's stock markets gain in importance.

In the UK the signs of strong demand for investment opportunities in big companies – despite the seemingly unfavourable political environment – could see a surge in stock market flotations in the second half of the year, according to Scott McCubbin, EY’s IPO leader.

Read more: £1bn Alfa float sparks hopes of recovery for London's IPO market

He said: “The number of companies in the IPO pipeline continues to build and activity is likely to see a revival towards the end of the year.

“Currency volatility is likely to continue to suppress activity within the large-cap IPO market, but the success of some listings this quarter may result in reinvigorating markets’ confidence and speed projected timescales up.

“There are signs that investors seem once again ready to look at the UK market large cap IPOs so we can expect a number of higher value IPOs in late 2017.”

British exchanges are vying for the float of the Saudi Arabian state oil producer, Saudi Aramco, which could be the biggest IPO in history.

Read more: Royal London Asset Management says an Aramco IPO must "play by the rules"

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