London IPO proceeds in 83% year-on-year rise, says PwC

Buoyant IPO activity in second quarter spurred by positive investor sentiment, eclipsing the political uncertainty of Brexit

Proceeds from London-based IPOs in the second quarter of 2017 were 83% up on the same period last year, according to PwC’s latest IPO Watch Europe report.

This is all the more remarkable given that volumes were up by only around 14%.

During the quarter, 24 UK IPOs raised some €2.2bn – compared to the 21 UK IPOs in Q2 2016, which raised €1.2bn.

The quarter’s largest IPO was the dual listing of Allied Irish Bank in Dublin and London, which raised €3bn with a valuation of €12bn.

Significant UK IPOs include that of trucking firm Eddie Stobart on AIM (€466m) and Alfa Financial Software – the largest technology IPO in London since 2015 (€321m).

“Despite ongoing geopolitical uncertainty,” PwC noted, “London has shown it is still able to attract cross-border IPOs, with ADES International (Dubai) raising €222m, Global Ports (Turkey) raising €184m and DP Eurasia (Turkey) raising €168m.

“The pipeline of overseas issuers looking at a future London listing is encouraging.”

In a parallel study of UK investor sentiment, PwC found that 81% of 275 backers are confident about growth prospects for UK companies over the next three years.

“There is a feeling among UK investors that the Brexit negotiations will create opportunities despite the uncertainty,” PwC said – underlining the faith that international investment groups have placed in London’s IPO market in recent weeks.

PwC pointed out that IPO activity in the Nordics remains high, with 43 offerings raising more than €1.6bn.

All in all, Europe’s IPO market concluded the period with proceeds of €15.6bn from 104 IPOs: a €4.7bn (43%) rise in money raised and 9% rise in the number of offerings, compared to the same quarter of 2016.

PwC capital markets leader Mark Hughes said: “With a number of IPOs pricing towards the end of the second quarter, the markets are proving resilient in the face of the forthcoming Brexit negotiations.

“As a sign of confidence, London is still able to attract cross-border IPOs as proved by the IPOs of ADES International, Global Ports and DP Eurasia … after the expected summer IPO hiatus, we expect IPO activity across Europe in the second half of the year to be relatively strong.”

Hilary Eastman, PwC head of investor engagement, added: “It is notable that even after the UK general election, investors are still reasonably confident about the future for UK companies, which may explain why London is still seeing healthy IPO activity.

“The ability for companies to adapt to uncertainty and changing situations will be vital to their success in these times.”

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