Advisers split with firms over recent UK floats

SMALL and medium-sized listed firms are split with their advisers on whether the recent jump in flotation activity will be good for their ability to raise funds.

A survey released today by the Quoted Companies Alliance (QCA) and BDO points to a major schism between firms and their advisers on the effect of recent flotations.

Fewer than half of the companies polled, 44 per cent, are confident that the recent surge in initial public offerings (IPOs) will be advantageous to the general environment for secondary financing among businesses of their size.

In comparison, 81 per cent of advisers say that same thing, revealing a much more bullish outlook on the situation for financing.

Despite the disagreement over the effect of recent IPOs, adviser and firms are closer to each other on one issue: 55 per cent and 59 per cent respectively say they are overvalued.

“Companies’ cautious approach to the improving business environment is to be respected. It points to a more measured, sustainable approach in the face of the renewed enthusiasm of advisors,” said Tim Ward, chief executive of QCA.

“Unrealistic company valuations could have a detrimental effect on companies’ prospects for secondary financing.”

Questions asked exclusively for City A.M. indicated that despite the recent upturn in sentiment, small and mid-cap businesses are still not particularly positive on pay.

Only 16 per cent of such businesses say that they will raise their employees’ salaries by more than inflation this year. More than half say they will raise pay just as fast as prices. A collective 23 per cent say that pay will either not rise at all in nominal terms, or that it will rise by less than inflation. Two per cent are actually still planning on decreasing pay.