After the highly successful Foxtons flotation, is London now set for an upsurge in IPO activity?


The outlook for initial public offerings (IPO) in London is encouraging after a much improved first half of the year. The pipeline for the year ahead looks exciting, with Foxton’s debut on the markets continuing the recent run of UK private equity-backed IPOs. The global markets appear to be in a healthier and more resilient state. Positive sentiment – the lifeblood of the IPO market – is returning. That the markets have been receptive to new issues in recent times is proof of this. The improving climate should provide an impetus to those companies that have been biding their time before deciding to float. It is a double bonus because the positive sentiment will help provide investors with the confidence to loosen the purse strings. To take advantage of the favourable market conditions, companies seriously considering an IPO still need to prepare properly. Crucially, they need to remain realistic on valuations if they want to attract investors and access the IPO windows when they materialise. Mark Hughes is capital markets partner at PwC.


Foxtons was floated at the top end of analyst expectations, and the forthcoming return of cash to investors from Vodafone means the environment for IPOs is probably better than it has been for some time. But experienced fund managers in the UK will likely proceed with caution. Their memories are coloured by the last great IPO boom at the end of the twentieth century, ending with the lancing of the technology bubble. Back then, the excitement surrounding new issues acted as a fig leaf for weak businesses, many of which eventually collapsed and left shares worth a fraction of the issuing price. In the US, investors seem to have been more willing to forget past problems and move on. Deals backed by private equity firms that have stripped assets and highly-indebted companies make us cautious too. These businesses tend to be so pared down that they struggle when economic cycles turn against them. Anne Richards is chief investment officer at Aberdeen Asset Management.

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