We have already seen the likes of Luxfer, Edwards and Manchester United list in New York when they might have been expected to grace the London flotation markets. Now there are rumblings that Intelligent Energy, a clean energy technology, might look overseas for a listing if it chooses to go for one. And my fellow columnist Mark Kleinman reported yesterday how Global Switch, the data centre operator founded by the Reuben brothers, might list just as easily in New York or Singapore than London.
Intelligent Energy is a growing company that appears to be going places. Recently it appointed Bank of America Merrill Lynch to advise it on a private placing and the suggestion is that it could float sometime. Although based in Loughborough, its management team is said to be wary of the London market, fearing it might give it a lowish rating. So, just as with other industrial technology companies, like Luxfer and Edwards, it might well follow a path to the US.
Fleetmatics, an Irish GPS fleet tracking company recently floated in New York and Wonga, the pay-day lender, is threatening to list on the wrong side of the Atlantic as far as the London Stock Exchange is concerned.
Certainly at the higher value end, London’s IPO market is in a sorry state. At least housebuilder Crest Nicholson’s intention to float, announced earlier this week, provided a fillip but more is needed to restore the market to anything like its former health.
Says David Vaughan, IPO leader at Ernst & Young: “In 2007 London was doing plenty of IPOs a year with a market capitalisation of £50m or more and in the last three years we haven’t even got into double figures.” Statistics show that in 2007, there were 46 main market deals, raising $33.2bn, whereas last year there were eight deals that raised just $4.3bn.
Some new issue investors have been mugged by a series of poorly performing issues from the likes of Ocado, Betfair, Perform and now Bumi. These investors view private equity sellers as too greedy.
There are signs at the lower capitalisation end of the market of increasing activity, however, with Liberum’s Steven Tredget hearing that investors are looking at an increasing number of situations.
There have already been a number of flotations recently where participating investors appear to be sitting pretty. These include Panmure Gordon’s float of Wandisco, a provider of global collaboration software, whose shares were issued at 180p last June and now trade at 548p. Another Panmure deal, Fusionex, a Malaysian software group, issued shares at 150p each in December that now trade at near 250p.
Says Panmure’s veteran banker Adam Pollock: “Our view is that if you show people a good company with the right prospects and good management, there will be strong demand for it, especially if it is an entrepreneur rather than a private equity group selling out.” Pollock says recent deals have attracted the likes of M&G, Aviva and Blackrock, investors that need to come back onside to get the main market going again.