Cash raised through initial public offerings in London plunged by more than seven times in the third quarter of the year as the Capital continues its barren run amid soaring inflation and market volatility.
Eight firms raised just £565.5m in total in the third quarter – a sharp fall from the record £4bn raised in the same period last year – as markets remain spooked by the fallout of war in Ukraine and the threat of looming recession, according to the latest figures from big four firm EY.
Six firms floated on London’s main market and raised £554.5m with Chinese firm Ming Yang Smart Energy Group providing the bulk of the figures with £548.3m raised.
EY’s IPO lead Scott McCubbin said it had been a “challenging” year on London’s IPO market as firms have shelved plans to float amid the volatility.
“Ongoing geopolitical tensions and economic instability, compounded by inflationary pressures, have meant many businesses have delayed their IPO plans until they believe inflation has peaked and stability returns to the market,” he said.
The figures strike a blow to London’s efforts to promote itself as a premier listings hub, after efforts by ministers and London Stock Exchange Officials to breathe life into the City’s capital markets.
London is looking to push through the recommendations of two major reviews of its capital markets ecosystem – the Hill and Austin reviews – in a bid to ease the way that firms can raise cash and to tempt firms into floating in the UK.
McCubbin added there was a rosier outlook ahead however with a “healthy pipeline” of IPOs from the beginning of next year.
“We expect listing activity to rebound in 2023 once inflationary headwinds ease, and companies have the stability and predictability required to realise their long-term growth plans,” he said.
IPO activity globally has born out a similar trend this year with 992 IPOs for the year so far raising US$146bn in total.
The figure marks a 44 per cent slump in terms of the number of IPOs and a 57 fall in terms of proceeds compared to the same period in 2021.