The first three months of 2021 have been the busiest quarter for initial public offerings (IPOs) for a decade, and the trend shows no sign of slowing this quarter, which is good news for retail investors looking for hot new ideas.
According to analysts at Liberum, £5.9 billion was raised by companies coming to market for the first time in the first quarter, and despite the car-crash that marked the debut of Deliveroo (ROO) right at the end of March, London remains the premier venue for new listings.
NEVER BEEN SO BUSY
Paul Matthews, chief executive of EQ Boardroom, the share plan, registration and advisory business of Equiniti (EQN), says his firm has advised on nine IPOs already this year and has another eight deals in the pipeline.
‘We’ve never had this many IPOs in a six-month period. It shows that, in a post-Brexit world, London is still viewed as an attractive market', says Matthews.
Moreover, the range of companies coming to market is more varied than it has been for years, from consumer stocks such as iconic footwear maker Dr Martens (DOCS) and online greetings card retailer Moonpig (MOON) to data centre and telecom tower operator Cordiant Digital Infrastructure (CORD) and cyber security firm Darktrace (DARK).
LESSONS FOR THE FUTURE
If there is a common theme in recent listings it is in firms accentuating the digital aspect of their businesses. THG (THG), which came to market last September, is generally seen as having set the standard of how to pitch a company as technology-led by playing up its nascent platform business.
‘Being digital and having some kind of platform is a very helpful ‘story board’ for investors’, says Matthews.
Also, despite misgivings from some investors, dual share structures - such as those used by THG and Deliveroo - are likely to become more commonplace, as the UK aims to compete with overseas exchanges in attracting more new businesses.
Another initiative which Deliveroo brought with it - and which Matthews says is likely to catch on - is the ‘direct to retail’ offering where firms offer their customers privileged access to their IPO.
Prepared-food delivery firm Parsley Box (MEAL:AIM) and pensions consolidator PensionBee (PBEE) both reserved part of their recent placings in order to offer shares direct to their customers.
Companies which have filed prospectuses or are widely expected to list later this year include Lloyd's of London insurer Canopius, biotech firm Oxford Nanopore and international payments group Wise.
Each listing is billed as a ‘blockbuster’, putting the value of the respective businesses at several billion pounds, meaning a bonanza of new opportunities for retail investors.
