Brexit Britain win as City of London records major stock market coup days into 2022
Farage praises ‘big victory for Brexit Britain’ in November
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New figures published by EY today (Tuesday) shows that some 121 businesses were given an initial public offering (IPO) in London – the highest since 2007. Newly listed firms raised over £16.3billion in the capital last year.
Companies in financial services, real estate and technology registered the strongest performances, the consultancy firm said.
The EY market tracker, IPO Eye, showed that the market “continued to see a significant flow” of floats in the final quarter of the year, with 17 IPOs raising £1.9billion in investment.
This surpassed the 15 IPOs in the third quarter of the year.
However, it was the second quarter of the year that saw the strongest performance, with £2.9billion generated in proceeds.
EY made particular mention of Pantheon Infrastructure, Life Science REIT and Softline Holdings – all of which raised between £300million and £400million.
The Alternative Investment Market – a sub-market of the London Stock Exchange – also saw strong activity.
On it there were 29 floats in the final quarter of the year, raising £1billion and bringing the total for the period across both markets to £2.9billion.
Further stocks issued by pre-existing public companies also raised around £6.5billion in the final quarter of 2021, EY said, bringing the annual total to over £32.7billion.
Scott McCubbin, EY UKI IPO Leader, said: “Last year was an exceptional year for the UK IPO market, with companies taking advantage of the open market to list in record numbers.”
However, he cautioned: “The outlook for 2022 is much less certain, with a number of prevailing headwinds, including inflationary pressures, which are likely to lead to interest rate rises and a move towards bond markets with more attractive yields.
“Supply chain issues and weaker consumer spending due to energy price rises also threatens market strength and may lead to a weaker equity market later in the year.”
Many countries have faced rising inflation this year as economies unlock from the pandemic, alongside global shortages and supply chain issues.
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The Consumer Prices Index including owner occupiers’ housing costs rose by 4.6 percent in the 12 months to November 2021, the Office for National Statistics said in its latest report.
In a bid to keep inflation down to stem a rising cost of living, on December 16 the Bank of England opted to raise the base rate of interest to 0.25 percent.
The bank – which sets the base rate for lending in the UK – slashed their interest rate to 0.1 percent in March 2020, as part of measures to tackle the economic instability caused by the pandemic.
A global shortage of natural gas last year put a strain on industry and personal finances, with energy prices soaring and a series of energy firms going bust in the face of higher wholesale prices.
Business Minister Kwasi Kwarteng said at the time that the reliance on natural gas for energy re-emphasised the need for the UK to have a strong domestic renewable energy sector.
Globally, 2021 was the most active year for IPOs in the past two decades, EY said in its report, with 2,388 deals – an increase of 64 percent by deals and 67 percent by proceeds.
Europe, the Middle East, India and Africa saw the highest growth in IPO activity, with a 158 percent increase in the number of deals.
EY attributed this to “pent-up demand held back” by uncertainty over the result of Brexit, as well as “other geopolitical factors”.
Helen Pratten, EY Strategy and Transactions Partner, commented: “The Global and London markets have shown exceptional resilience in delivering record IPO numbers against the uncertainty of the Covid pandemic.
“However, whether this resilience can continue as other adverse factors come into play whilst the threat of new Covid variants is still present is open to debate.”
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