PwC: London reclaims crown as leader for European IPOs
Having delivered one of the strongest third quarters in recent IPO history with £3.9bn of issuance, the London Stock Exchange has regained its position as the dominant European IPO market, according to the latest edition of PwC’s IPO Watch Europe.
This is despite higher-than-normal volatility, triggered by rising inflation on the back of supply challenges and labour shortages.
The London Stock Exchange saw 25 IPOs raise a total of €4,496m, among the largest of which was financial institution Petershill Partners plc, which raised €1,179m, and asset fund management group Bridgepoint Group which raised €1,052m.
Further Offers (FO) of 80 were raised at London Stock Exchange, totalling €9,451m, with the largest FO, the airline easyJet plc raising €1,507m.
Sectors were diverse, though the largest transactions hailed from the consumer, tech and financials sectors. Some of the most notable Q3 UK-based IPO highlights included Revolution Beauty Group (£300m), Big Technologies (£202m) and Peel Hunt (£112m).
European IPO activity strong despite market volatility
This marks the fifth consecutive quarter of growth in the number of IPOs pricing on AIM and follows what has been an incredible first half of the year for the European IPO market overall.
This quarter is also the busiest for European IPOs in recent years, delivering a total of 64 transactions that raised €10.9bn, including some IPOs that raised over €1bn, including Petershill Partners, Azelis Group and Bridgepoint Group.
And all this activity despite both the traditional summer slowdown in activity, and some market volatility driven by macroeconomic concerns as major economies continue an uneven recovery from lockdown.
“As we anticipated in our previous report,” states PwC’s UK Capital Markets partner, Richard Spilsbury, “we continued to see a strong IPO market in Europe this quarter with a variety of corporates across financials, technology, healthcare, industrials and consumer related sectors.
“Similarly, we have seen significant activity across various markets in Europe with London, Brussels and Paris being the most active.”
Moving into Q4 2021 and beyond – the IPO pipeline
Having supported a number of corporates going through IPO readiness exercises in Q3, the future points to a steady supply of deals in Q4 and early next year, comments Ekaterina Chmatova, senior manager in Capital Markets at PwC.
The IPO market has become a buyers’ market, where investors zoom in on the valuation and attractiveness of the investment case.
A further key consideration for investors is the aftermarket performance that ties back into the pricing and the overall story of the issuers and highlights the importance of early meetings with investors and ability to demonstrate an attractive equity story underpinned by a robust set of KPIs.
There is also a significant emphasis on ESG strategy, governance, technology and cyber security aspects of readiness and a focus on value creation through implantation of no-regret IPO readiness steps.
UK partner, Spilsbury, adds: “The broadening of the pipeline will likely continue with investors testing the valuations and investment cases harder as we go into Q4, calling for robust equity stories underpinned by strong internal controls and ESG.”
New UK rules could further boost London IPO pipeline
London could see a further boost to its IPO pipeline for Q4 and beyond with the upcoming implementation of UK listing rules changes.
The rules changes – which include the introduction of dual class share structure within the premium listing segment and reduction of the minimum free float level from 25% to 10% – could remove the barriers to listing in London for some of the tech and founder-led businesses.