London’s IPO lull expected to last into 2027
London’s IPO market is expected to remain subdued for the rest of the year, as domestic and overseas political upheaval puts companies off listing.
The UK’s stock market has had minimal IPO activity this year to date, seeing just seven new listings which raised a combined £557m.
This ended the IPO surge seen at the back end of last year, with British bank Shawbrook and tinned tuna giant Princes Group among the new names entering the market.
In comparison to the listing drought, the FTSE has been hit by a wave of takeover deals since the start of the year. Stalwarts including Schroders and Tate & Lyle have been plucked off the market, as private buyers looked to take advantage of the UK’s valuation gap.
Others have chosen to list elsewhere, including gambling group Flutter which completed its listing on the New York stock exchange on Monday after revealing that it planned to walk away from London in June.
Investment bank Peel Hunt pinned the market’s lopsided nature on the impact of market volatility and ongoing geopolitical events, including the conflict in the Middle East and global tech selloffs, causing companies to delay going public.
Analysts anticipate a slight uptick in the second half of the year, but admitted that many firms who have considered listing may wait even longer.
“IPO timetables had been pushed back to post summer for some time now, so the recent lack of activity is not a surprise,” a note from Peel Hunt said.
“The big question…waiting to be answered was how many of these deals were going to come post summer or alternatively be pushed back into 2027.”
All eyes on Burnham
Entering the second half of the year, companies debating going public are turning their docs to new prime minister Andy Burnham.
Burnham and his team, including City minister Lucy Rigby and chancellor John Healey, are yet to announce new policies surrounding London’s IPO market. This is despite mounting pressure for the government to intervene and reverse the slow start to the year.
Both industry and political figures are urging ministers to step up amid accusing the financial watchdog of not spending enough time dealing with the problems plaguing London’s market.
Peel Hunt said the uncertainty surrounding Burnham’s market policy “has led many potential issuers to re-evaluate their timetables”, causing many to push back even further to next year.
The bank also claimed there remains “a number of high quality” companies in the UK pipeline, but many in the industry do not share this optimism as blockbuster IPOs have become exceedingly rare.
Food delivery firm Deliveroo was the last to do so, floating for £7.9bn in 2021, but was ultimately sold to US rival Door Dash four years later following a turbulent period on the stock market.
This year’s largest listing was the sovereign wealth fund of Uzbekistan which floated for £1.4bn in May.