‘There has never been a better time for big companies to undertake an initial public offering,’ or IPO, confidently state analysts at Salt Invest, the stock market trading house.
Stock markets around the world have recently been hitting successive record highs, creating just the sort of conditions to tempt some of the mega private companies to finally make their move into public markets.
Last year was hardly a banner one of IPOs, not in London anyway. Allied Irish Bank, listed as AIB Group (AIBG), was London’s largest by market cap last year thanks to its €12bn (rough £10.5bn) market cap in June 2017.
But market experts remain optimistic that the pipeline will be firmer this year, and we look at three potential giants that could end up on stock markets either in London, or elsewhere during 2018.
THREE POSSIBLE BIG FLOATS
Saudi Aramco
WHAT DOES IT DO?
Saudi Aramco is the national oil company of Saudi Arabia and the world’s biggest oil producer. Aramco’s internal operations and finances have been shrouded in secrecy for decades and the close relationship with the State has generated a lot of financial, legal and regulatory challenges.
THE PLAN
The plan is to sell 5% of the company in a deal expected to raise $100bn, which would value the business at between $1trn and $2trn, or $1,000bn to $2,000bn.
It would list on the local stock market in Riyadh as well as a leading international stock exchange, most likely either London or New York.
London had been mild favourite, but tax reforms passed in the US have suddenly made a New York listing a stronger possibility.
Airbnb
WHAT DOES IT DO?
Based in San Francisco, Airbnb has grown to become a trusted community marketplace which allows people to list, discover and book private accommodation around the world online by phone or tablet.
Airbnb, which offers more than 3m properties worldwide, has been blessed with good timing and the company has ridden the recent wave of sharing or collaborative consumption.
The sharing economy has developed as a trend taking people back to market behaviours of the past which involved sharing, swapping, lending and renting; but helped by technology and reinvented for the internet.
THE PLAN
There have been rumours about an Airbnb IPO for a couple of years now. In November 2016, the chief executive (CEO) and co-founder Brian Chesky confirmed that the company was preparing to be IPO-ready as soon as possible.
It has been suggested that the IPO may be timetabled to follow the release of the group's new flights platform, and so the smart money is now on the Airbnb IPO happening sometime in 2018. The company was valued at $31bn, based on the last round of equity funding in March 2017.
O2
WHAT DOES IT DO?
Britain’s second largest mobile network operator. The company has been in private ownership since it was demerged from BT (BT.A) in 2001.
The current owner, Spain’s Telefonica, is one of the largest private telecommunications companies in the world.
THE PLAN
Rumours have been swirling around about an O2 IPO for ages. What is likely to be floated off is the Telefonica UK arm, which might end up being the quoted entities name also.
This includes O2 along with the Giffgaff brand, plus a 50% stake in Tesco Mobile. O2 has more than 25m customers nationwide.
Telefonica tried to sell O2 to Hutchinson, the owner of rival Three, in a £10.25bn deal a couple of years ago but that sale was blocked by EU regulators on the grounds of being anti-competitive. It would have cut the number of large players in the UK mobile telecoms space from four to three.
It is common knowledge that O2’s parent company Telefonica has a mountain of debt, in excess of €50bn, which is probably forcing a sale of some sort.
