London could see a wave of flotations from life sciences, tech and resource firms in the new year as the stock market bounces back after a tough 2016, the chief executive of City broker FinnCap has said.
Market activity – including capital raising, mergers and acquisitions (M&A) and initial public offerings (IPOs) – slowed around the Brexit vote and US elections, but Sam Smith said that rising confidence could usher a raft of new public listings.
People are just cracking on with dealsSam Smith
He said: “There was Misys pulled, there was Pure Gym pulled – everything was looking as if IPOs were off and everything was off. And then suddenly we had Trump getting in, and the market seemed to bounce. People are just cracking on with deals.”
FinnCap, known as a leading broker for Aim-quoted firms and smaller businesses, is on track to beat last year’s record pre-tax profit of £2.8 million, which a few months ago would have been a “very tough act to follow”, Smith said.
But while cancelled IPOs are not expected to come back online in the short term, there is now a widow for growing life sciences and tech firms to make their stock market debuts following a “slow start” in 2016.
“Life sciences was a bit on hold in the first quarter, and then recently we’ve seen Creo Medical, Oxford Biodynamics both raising £20m … that space seems to be hotting up again,” she said.
“In the second half we’ve seen two interesting growth tech IPOs that went quite well and that was FreeAgent, LoopUp and I think there are a couple more which are coming.”
M&A activity on junior stock market up in 2016
The Alternative Investment Market (Aim) has seen merger and acquisition (M&A) activity rise by a fifth between 2015 and 2016, bucking the broader trend for falling deals and boosted by the fall in the pound making transactions more attractive to overseas buyers, writes Emma Newlands.
Accountancy group UHY Hacker Young said 34 companies were taken over last year, up from 28 in the previous 12 months. There was a flurry in activity in the last quarter with 13 Aim firms being bought, marking a year-on-year jump of five. Meanwhile, 70 per cent of the bids for firms in the last three months of 2016 came from abroad.
UHY Hacker Young also noted that the number of firms de-listing from Aim has grown, with 105 leaving in 2016 and 44 new entrants.
Laurence Sacker, managing partner at the accountant, said such a net increase may question the market’s future, but he stressed: “The increase in M&A shows that Aim works.”