Fast growing UK firms are shelving plans for initial public offerings in droves as a looming recession and inflationary pressures batter public markets, a survey has revealed.
Some 87 per cent of pre-IPO firms said they were now looking to delay plans for a shift onto the public markets, as rising interest rates and and volatility cause firms to pull back, according to a survey of business chiefs from business spend firm Coupa Software.
Bosses surveyed said that delays had been sparked by the turbulent economic backdrop, with 31 per cent citing rising interest rates and the same figure pointing to turmoil on equity markets as the key reasons for the delay.
Just one in five of the firms surveyed also said they are now confident they have the financial stability to meet growth plans laid out prior to the current economic downturn.
The survey findings come after figures showed that London’s IPO market plunged in the first quarter of 2022. Flotations on the London Stock Exchange raised £308m between January and March, compared to £5.6bn last year, data from big four firm EY found.
Bosses at Coupa said volatility were scuppering plans for IPOs across the board.
“High-growth and pre-IPO phases are major stress tests for any company,” said Tony Tiscornia, chief financial officer at Coupa. “An uncertain market environment like we’re seeing now doesn’t help either.”
The appeal of the UK’s markets has also been dealt a heavy blow by Brexit, figures revealed last week, with firms increasingly shunning London in favour of New York.
IPO activity in the country dropped to about 23 per cent of Europe’s IPOs in the five years following Britain’s decision to exit the EU in 2016, from near 30 per cent in the five years before it, Bloomberg data showed.
A series of public market flops have also dented confidence in the markets, with firms like Deliveroo, THG and Wise slumping over 60 per cent since their IPOs.
The figures deal a blow to the government’s efforts to promote London as an IPO capital, following a major review of the listing regime in the UK last year to try and tempt more firms into floating in London.
Ministers and London Stock Exchange bosses pushed through measures including dual-class share structures to boost the appeal to founders, with a number of further reforms including fresh tax incentives for investors being weighed up this year.