THE flotation of WorldPay last week in the UK’s largest initial public offering (IPO) so far this year could spark an increase in stock market listings in the months ahead, according to dealmakers.
Uncertainty around the outcome of the general election is thought to be responsible for a dramatic fall in the number of UK IPOs during the third quarter as many businesses decided to postpone, according to EY’s latest IPO Eye report.
But transaction advisory services partner Mike Timmins believes a confidence boost from WorldPay’s successful IPO and absence of a hung UK parliament now sets the scene for a potential surge in IPO activity including north of the Border.
“Although there have been no new listings in Scotland since Exova Group joined the main market in April 2014, the outlook for potential floats remains positive with a number of our clients considering this as a viable option for realising value,” he said.
“Typically, a dual track process is being followed with trade sales currently attractive due to the low cost of capital for M&A and the decision on the potential IPO of Worldpay should have a direct impact on confidence as enter Q4.”
EY’s latest IPO Eye reported six UK IPOs in the third quarter of the year raising £194m against 19 and £1.5bn over the same period last year. The main market saw two IPOs raising funds of £149m and the Alternative Investment Market (Aim) produced four IPOs, raising £45m.
Overall, firms listed during the period performed well, with new stock on the London main market trading on average at 35 per cent above offer price. Aim-quoted performance was not as positive, with stock on average trading at 10 per cent below their offer price.