Flotation fundraising slows in early 2016 but IPO interest rises

The UK flotations market has had a 'subdued' start to 2016, with the £1.6 billion of fresh funds raised nearly 60 per cent down on the previous three months '“ but amid rising Scottish interest in public listings.

Clydesdale Bank was one of the two of the top five largest IPOs globally this year so far. Picture: Craig Borland

The figure raised from IPOs (initial public offerings) in the first quarter of this year compares with £4bn in the closing months of 2015, according to accountancy and management consultancy giant EY in its latest IPO Eye report.

In the first three months of this year there were 15 flotations, nine on the main market and six on the junior Alternative Investment Market. This compared with 13 listings in Q4 2015.

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Mike Timmins, EY executive director of Edinburgh-based transaction advisory services, said: “The UK has experienced a slow start to 2016, brought about largely by market volatility, concerns regarding slowing economic growth and the uncertainty created by the EU referendum.

“Despite this, we have seen that well-priced businesses, often backed by PE (private equity), attract investor interest and deliver strong aftermarket performance.

“Equally, the pipeline for future listing is strong with companies targeting longer-term listing dates towards the final quarter of this year and beyond.”

The EY report said it was encouraging that given the broader uncertain political and economic backcloth, London “prevails as the leading market in Europe for IPOs”.

The main London market and Aim accounted for 45 per cent of European listings, including two of the top five largest IPOs globally this year so far – Glasgow-based Clydesdale Bank and its sister operation Yorkshire Bank, and the IPO of Metro Bank.

Timmins said despite the relatively muted climate for floats in the past three months the “appetite for IPOs in Scotland was building, partly fuelled by Clydesdale’s demerger on to the stock market from its former parent, National Australia Bank”.

He said Scottish listing interest was “firmly on the radar as a realistic option for an exit or as access to capital”. However, he added that there had “been a reset of expectations” in terms of timing, with later this year or 2017 more likely target dates rather than the opening half of 2016.