Confidence lifts value of market for UK flotations

THE value of UK initial public offerings (IPOs) has soared to $7.16bn (£4.47bn) this year – more than eight times the amount raised by this time last year, according to Dealogic data.

A list of 39 flotations this year includes monster deals such as the insurance company esure, with a deal value of more than $1bn, Platform Acquisition Holdings, with an $885m deal value, and Partnership Assurance Group, with a deal worth $853m.

IPOs for Countrywide, Hellermann Tyton Group, Greencoat UK Wind and Crest Nicholson all had a deal value of between $350m and $394m, according to Dealogic.

The Foxtons float adds another $627m to the total figure, which does not include the £1.2bn that could be raised from the planned Royal Mail float.

The boom in IPOs, which is leading the UK towards its best year for flotations since the financial crisis, points to investors’ increasing confidence in the economy but also to greater trust between the buy-side institutions in the UK, greater demand from investors in the US and elsewhere and more conservative pricing decisions by private equity groups bringing new issues to market.

Crucially a number of issues, such as Direct Line insurance and Partnership were priced at levels below which they could have successfully got away, leaving buyers with an immediate upside.

Such pricing decisions answered the criticism of fund managers such as Schroders’ Andy Brough who had been critical of the high prices being charged by some companies coming to the market.

The Foxtons deal was priced at the top of its range but shares still went sharply higher in first day trading on Friday. Foxtons shares were issued at 230p and closed the day at 267p.