London’s new issues market is back but still has a way to go to join the top table

David Hellier
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WHEN this newspaper first considered holding a roundtable discussion on the London new issues market last year, the environment was pretty grim.
Bankers widely described the door for bringing companies to market and to raise new equity finance as being slammed firmly shut.
Indeed when the Salford-based specialty metals group Luxfer last year decided to float its shares on the market it decided to list in New York. When I asked the banker advising on the deal whether he had considered floating the group in the UK where its base was, he said he had considered the idea for about 30 seconds. That’s all it took to convince him and others on the deal that London was an unviable option.
The banker worked for Jefferies, a US bank that has a growing presence in London thanks to its decision to buy the broker Hoare Govett from the struggling part state-owned bank RBS. It was an ensuing conversation with Jefferies about the London market that led to the debate we held last night in the St Paul's offices of another US bank, Bank of America Merrill Lynch.
What most attendees agreed on was that there’s no doubt the door is far less shut than it was a few months ago.
Starting with the sale of part of the RBS shareholding in Direct Line at the back end of last year, there has been a steady stream of decent sized London flotations. Indeed, with companies such as eSure, Countrywide and Partnership Assurance raising funds already this year, the number of main market flotations in 2013 is already higher than in 2012.
But the door is certainly not wide open. There have been eight issues this year compared to 40 in 2007 and around 75 in New York so far this year.
Some sectors are notoriously worse than others, as far as London is concerned.
For example, earlier this week, bankers were appointed to advise the games maker on a likely flotation. The listing is unlikely to be in London, though, with advisers hinting strongly that New York will be the preferred option despite the problems associated with the recent floats of Zynga and Facebook. Writing in City A.M. earlier this week Tim Bunting of Balderton Capital, who was one of our panellists last night, said that when his group decides where to float, London isn’t always management’s preferred option.
He says London has never had a stronger pipeline of tech companies and yet fears it could lose many of them when it comes to listing. “At the moment listing in New York is a no-brainer for many technology companies.”

To listen to the speakers from yesterday's event press play on the audio below...