London Stock Exchange: Year in IPOs
This year has been a busy one for the London Stock Exchange (LSEG.L), with a soaring number of initial public offerings (IPOs) taking place.
According to Bowmore Asset Management, there has been a 310% jump in companies floating on the exchange in 2021, taking total listings in the City to 113. This is compared to just 36 last year as the coronavirus pandemic ripped through the economy.
Some 27 IPOs alone took place during July and August this year – a period that is usually quiet for listings. It was the highest number of IPOs during any two-month period since 2016.
The data also revealed that the market value of companies listing in London this year climbed more than 300% from £16.5bn to £50.9bn.
Technology firms, healthcare and industrials continued to lead the charge across the world, with added interest in special purpose acquisition companies (SPACs).
Globally, the technology sector saw the highest number of IPOs, standing at 611, for the sixth consecutive quarter, while IPO volumes rose 64% worldwide, and proceeds rose by 67% year-on-year.
Read more: UK tech boom creating billion-pound company every week
“2021 was the most active year for the IPO market over the past 20 years,” Paul Go, EY Global IPO Leader, said. “Initial optimism from rebounding economies, COVID-19 vaccine rollouts, and rolling liquidity from government stimulus programs provided strong tailwinds.
“In Q4 2021, however, the winds shifted with the surfacing of the COVID-19 omicron variant, continuing geopolitical tensions, slowing IPO activity and increased market volatility.
“He added: “Whether or not IPO-bound companies press pause or forge ahead in 2022, they will need to satisfy investor demands for resilient growth strategies and well-articulated environmental, social and governance (ESG) plans.”
While there are some stock market debuts investors would sooner forget, others have managed to offer strong returns for traders.
Let’s have a look back of some of the UK’s IPO highlights, and lowlights, of the year:
Food delivery company Deliveroo (ROO.L) suffered one of the worst debuts on record in March, with shares falling 30% in the first half hour of trading, wiping more than £2bn ($2.7bn) off the company’s value.
Tens of thousands of retail investors who invested in the firm through a platform called PrimaryBid faced heavy paper losses on the back of the fall. About 70,000 individuals put as much as £50m into the company.
The IPO flop was also bad news for Amazon (AMZN), which is the biggest institutional investor in the business with a 10% stake.
Read more: Deliveroo shares plunge on London stock market debut
Despite national lockdowns forcing restaurants to close their doors to the public and the number of takeaway deliveries soaring to record highs, Deliveroo is yet to make a profit.
“Not all stocks have a happy start to life on the stock market – just ask Tim Steiner or Mark Zuckerberg – but it’s not a great advert for London as a destination for tech listings,” Neil Wilson of Markets.com said at the time.
Watch: Deliveroo doubles Q1 orders, seeks IPO redemption
Shares in British cybersecurity group Darktrace (DARK.L) rocketed in May on their London Stock Exchange debut.
The company’s initial public offering valued it at £1.7bn ($2.3bn), which equated to 250p a share. However, within minutes of conditional trading, shares jumped to 350.4p, a rise of 38%.
Since its listing shares climbed as much as 200%, however, a recent sale from shareholders after a lock-up that prevented insiders selling their stakes, the stock has fallen more than 50% from its highs.
Darktrace, which was founded in Cambridge in 2013, uses artificial intelligence (AI) technology to spot cyber threats for businesses.
Read more: Tech giant Darktrace heads for FTSE with £3bn IPO plan
The AI is used to build what it calls an “enterprise immune system” that monitors company’s computer networks to detect unusual activity and then respond to it. The technology stands in contrast to traditional cyber security software that tries to build a wall around networks to block intruders.
Some of its clients include BT Group (BT-A.L), and online grocer Ocado (OCDO.L).
Wise (WISE.L), formerly known as TransferWise, has become one of the most valuable fintech start-ups in Europe.
Wise made its market debut on the London Stock Exchange on 7 July via a direct listing, rather than selling shares at a set price in advance.
This meant that the opening price was determined in an open auction on the date of admission to the exchange. In direct listings, companies sell shares directly to the public without getting help from intermediaries.
Watch: US market remains strong as global IPO Market slows down in Q3
This happens when firms can not afford underwriting, do not want share dilution, or are avoiding lockup periods, a less-expensive option than an IPO, according to Investopedia.
The method was pioneered by Spotify (SPOT), which used a direct listing to join the New York Stock Exchange in 2018. However, it is rarely seen on this side of the Atlantic.
Having started out offering money transfer services, after being founded in 2011, its growing product range drove the firm to change its name. Wise transfers over $6bn per month to over 10 million international customers.
Wise was valued at almost £9bn after listing, making it the largest-ever listing of a UK tech company. Shares began publicly trading at 800p in London and finished the day up 10% at 880p.
Review website Trustpilot (TRST.L) surged in its stock market debut, giving the Danish firm a valuation of £1.1bn at the time of the listing.
The IPO raised about £473m in total, with existing investors selling 161 million shares and the company itself issuing 17.6 million shares.
Trustpilot currently has 420,000 businesses on the free subscription service, and 26,000 paying an average of $5600. Companies get a limited service for free, then can buy additional services on top. These extra services are largely analytic tools that enable them to figure out how better to serve their customers.
Shares in Oxford Nanopore Technologies (ONT.L) rocketed on its market debut in September in what became London’s biggest biotech listing, valuing the firm at $6.84bn (£5.1bn) at the time.
The DNA-sequencing company, which provides COVID-19 test kits to the NHS, had priced its shares in its initial public offering at 425p each. This was in the top half of an initial range after selling more shares than planned due to high demand.
However, the stock rocketed during its first day of trading, climbing 45% from its flotation price to as much as 619p within an hour.
Read more: Why Oxford Nanopore IPO proved a major hit
The IPO marked a significant move for the London Stock Exchange as most British pharmaceutical and life science companies usually list on New York’s Nasdaq.
Oxford Nanopore is a spin-off of the University of Oxford, founded in 2005. It has around 600 employees in offices in Cambridge, New York, San Francisco, Singapore and Beijing.
Online greeting card retailer Moonpig (MOON.L) saw its shares surge 25% as it made its London stock market debut in February.
The company set its share price at 350p. Shares were at around 440p shortly after they debuted on the exchange, as conditional dealings kicked off.
Moonpig has about 12 million customers and sends 45 million cards a year. In the year to April 2020, it made £44m worth of profit on the back of sales of £173m in sales.
Read more: IPO Watch: How to spot a unicorn
“Apparently pigs do fly, well Moonpig did at least, with the greetings card website following on from Dr Martens’ big step forward on market debut to trade significantly higher after this morning’s float,” AJ Bell investment director Russ Mould noted.
Watch: IPO market is at all-time highs as 900+ companies have gone public in 2021, $300bn raised
Shares in private equity firm Bridgepoint (BPT.L) surged on their debut in London, jumping 21% to trade at as much as 423 pence per share.
The initial offer was priced at 350 pence per share, giving the group a market cap of £2.9bn, the largest private equity listing in decades.
Its debut came at a time when private equity deals were booming in the UK, as a spending spree ensued.
Buyout groups in the UK have historically tended towards remaining in small, private partnerships. By contrast, private equity giants Blackstone Group and KKR in the US went public more than a decade ago.
Recent Bridgepoint investments have included high-street chain Itsu – it gave a substantial investment to open up to 100 new sites. It also recently acquired financial software company Fenergo and owns stakes in Burger King franchises in the UK.
British boots brand Dr Martens (DOCS.L) kicked off its stock market debut at the end of January attracting bumper demand in sale valuing the firm at over $5bn.
Shares in the company were up as much as 19% as it began to trade in London after owner Permira Holdings and other investors raised $1.8bn.
The company famed for its black boots with the yellow stitching said that its offer was over eight times oversubscribed.
Read more: Dr Martens valued at £3.7bn in stock market debut
The company weathered the economic fallout of the coronavirus pandemic well, despite it taking a toll on the retail sector overall. Its group revenue was £318m in the six months ended 30 September 2020, a rise of 18% year-on-year.
It repaid its furlough money back to the British government in August last year following good financial results.
The company sells more than 11 million pairs of shoes every year in around 60 countries.