Companies pull London IPOs
London’s reputation as a global centre for capital markets suffered another blow yesterday when a third company pulled its planned London Stock Exchange listing in the space of a fortnight.
Georgian Railway blamed market turmoil as it postponed plans to raise up to $250m (£160m) by selling as much as a quarter of its stock. Its decision represents a blow to the City, just 24 hours after bid vehicle Tungsten put off a £200m fundraising and two weeks after a similar move by Russian property investor O1 Properties.
The London listings drought contrasts with a better record in other major financial centres. In the US initial public offerings (IPOs) are up 19 per cent so far this year to $29.1bn, including the $16bn raised by Facebook last week, Dealogic said.
London has not seen a major IPO since Glencore raised $10bn last May but whose shares have since sunk by a third.
Since Glencore a series of British companies have lined up listings elsewhere, with Graff Diamonds expected to raise $1bn in Hong Kong while Formula One, run by London-based Bernie Ecclestone, hopes to raise at least $2.5bn in Singapore. British vacuum technology firm Edwards listed on Nasdaq two weeks ago after pulling a planned London listing last year.
The Georgian Railway float was pulled in another week of turmoil during which European shares tumbled and Eurozone leaders failed to come up with a plan to rescue Greece.
“We realised that the price would not be high enough due to the current situation on the markets,” said Georgian prime minister Nika Gilauri.
Georgia said it also took into account the chaos surrounding the Facebook float. It will revive the IPO or issue eurobonds as soon as conditions have improved and analysts said London remains a strong fundraising centre.
“I am convinced that London institutions will support IPOs for a high-quality issuer at reasonable price,” said Craig Coben, head of European equity capital markets at Bank of America Merrill Lynch.
Lorna Tilbian, executive director at Numis, which pulled Tungsten’s float, said Graff went to the Far East because most of its core clients are there.
Tracey Pierce, LSE director of equity primary markets, said: “We are still seeing a flow of companies coming to main market and AIM but clearly it is at a lower level than in previous years. I am not surprised at that given global market conditions.
“We have a very strong pipeline of IPOs with an international weighting, particularly from emerging markets… Feedback from companies is that underlying demand for equity capital remains very strong and we remain one of the leading listing venues.”