Comment: Buoyant flotations | Help to buy
It comes in the wake of a charge of private businesses to publicly-listed status recently, including discount retailer Poundland, Pets at Home, fashion website boohoo.com and AO, the digital white goods retailer.
In 2014 IPOs have had their busiest first three months of a year since 2007. The latter year was the previous high water mark for flotations in an opening quarter.
Unfortunately, before 2007 ended crowds were queuing round the block for their Northern Rock savings in what proved a dry run for the financial crash of 2008.
The London Stock Exchange (LSE) says seven retail flotations have raised £2.1 billion so far this year. There is a strong internet flavour to these IPOs, but the upswing in activity is not restricted to it.
Poundland, in particular, is slinging punches for the old bricks-and-mortar model, the shares soaring on their first day of trading.
Meanwhile, the luxury end of retail also wants to capitalise on propitious stock market conditions to raise money for expansion while the sun shines.
Labelux, owner of Jimmy Choo, is considering the float of a minority stake in that ritziest of shoemakers. The London Stock Exchange says the spate of flotations shows that investor appetite, particularly for retail companies, is clearly whetted.
And, scrutinising the offer prices, these floats have the confidence not to be “priced to go”; they are being priced to raise significant capital on the back of good sentiment.
With the recent upsurge of offerings, it means that 70 retail businesses are now listed on the LSE’s markets – 47 on the main market and 23 on AIM for smaller, fast-growing companies.
The drive to a public listing is also not being hurt by macro and geo-political worries, either, from the standoff in Ukraine to fears that the Chinese economic locomotive is slowing down.
The flotation bandwagon tells us that investors feel better times are ahead, including a clear rebound in the UK economy in 2014.
Companies seeking IPOs don’t just want opportunistic capital-raising exercises. They want a good after-market in their shares as well. And it looks like they are getting both.
Housebuilders get a helping-to-buy hand
Manna from heaven for the housebuilding sector, as George Osborne has pledged to extend Help to Buy for another four years.
The Chancellor’s apparent preparedness to risk a housing bubble in order to sustain new-found momentum in a key economic and political sector added hundreds of millions of pounds to the market values of Britain’s leading housebuilders.
Persimmon, Taylor Wimpey, Barratts and Bovis were all among the beneficiaries of the move aimed at getting more first-time housebuyers on the ladder.
Very few expected a vote-winner like Help to Buy to be pre-election – Osborne knows where his brick is buttered. But it was the commitment to a lengthier life for the scheme that invigorated housebuilders’ shares.
It was the sector’s equivalent of an impressive extension.