Eighteen months since last Scots flotation
Scottish firms may turn to market as appetite grows for IPOs
Worldpay’s £5 billion initial public offering last seek was the biggest in the UK this year and could prompt the revival of a number of stalled flotations, says an Edinburgh-based expert in transactions.
The General Election was held responsible for a sharp fall in the number of IPOs in the early part of the year.
Experts at EY now expect to see greater confidence in the market and believe the Worldpay flotation may motivate many companies to reactivate plans for IPOs they postponed in Q3.
Mike Timmins, an executive director at EY in Edinburgh, said: “Quarter three has seen low levels of activity but it is hoped that this year will finish on a high with those companies which postponed their IPO plans coming to market in the final quarter.
“Investor confidence remains high for newly listed companies, especially those in the technology, media/entertainment and financial sectors. We expect this to continue throughout Q4 with the potential for this confidence to spread into the retail and construction sectors in the first quarter of next year.”
There have been no listings in Scotland since Exova Group joined the Main Market in April 2014, but Mr Timmins believes the outlook for potential floats remains positive.
“A number of our clients are 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 IPO Eye reported six UK IPOs in Q3 raising £194 million against 19 and £1.5bn over the same period last year. The main market saw two IPOs raising funds of £149m and AIM produced four IPOs, raising £45m.
Companies that listed during the period generally performed well, with new stock on the London Main Market trading on average at 35% above offer price.
The Alternative Investment Market (AIM) listed companies performance was not as positive, with stock on average trading at -10% below offer price.