A total of £630bn raised globally, as IPO market performs strongly
Global equity fundraising has hit its highest levels for over 10 years, as both European and UK ECM issuance rebounded strongly from a challenging 2016, according to new report from KPMG’s Equity Capital Markets group.
The year to date has seen more than £630bn raised globally via IPOs and equity follow-ons, excluding convertibles. More than £40bn of this was raised on the London Stock Exchange, an increase of a third when compared to 2016, and significantly ahead of other European exchanges (Germany: £23.2bn and France: £22.7bn).
With a number of companies still expected to list before Christmas, the LSE has seen more than 100 IPOs to date, raising over £15bn in aggregate - more than 2.5x the value, and more than 1.5x the volume, seen during 2016. Indeed, over the last decade, only 2014 has exceeded this year in terms of number of floats completed. Landmark listings during the year include the £2.6bn IPO of Allied Irish Bank; the £1.14bn float of EN+ Group; and the £912m listing of J2 Acquisition.
It was also a strong year for the Alternative Investment Market (AIM). At circa £7.1bn, the equity raised on AIM represented over 17% of total London issuance in the year to date - the highest proportion since 2010.
Marco Schwartz, head of KPMG’s Equity Capital Markets Advisory team, commented: “Although global ECM volumes recorded a modest year-on-year decline in the second half of 2017, momentum from the first half of the year made this the best year for fundraising worldwide in a decade. With headline equity indices registering gains and market volatility remaining low, IPO activity in particular helped drive activity to recent highs.
“Despite some high-profile postponements of planned listings, the London IPO market remained active in the second half of 2017. Interestingly, IPOs represented almost half of total equity raised in the UK during the period, a much greater proportion than in prior periods. Overall main market ECM activity was, however, relatively more subdued in the second half, in any case a shorter window, with a noticeable absence of completed rights issues and fewer primary and secondary placings weighing on volumes. Conversely, AIM experienced a marked step-up in activity led by a number of flotations and some sizable placings.”
Financial Services was once again the dominant sector for new issuance, with the launch of several large acquisition vehicles during the period. Meanwhile, Real Estate continued to be an active sector particularly in the closed-end fund space.
Linda Main, head of KPMG’s Capital Markets Group added: “The UK IPO market has recently seen evidence of investor demand becoming increasingly price-sensitive, leading several large companies to postpone or re-price their IPOs. Meanwhile, other IPOs that were in the market or anticipated have been aborted due to private equity approaches; a reminder that financial sponsors continue to have capital to deploy and compete with public markets as a source of funding and liquidity.
“Nevertheless, as we head into 2018, we continue to see a strong pipeline and the general sentiment, borne out by IPO activity during the year, is that markets remain confident and open to those companies with compelling equity stories and realistic valuations.
“Indeed, we believe that investors and companies have in general acclimatised to the global political and economic uncertainty that held issuance back during 2016. With equity markets continuing to support new deals, and the UK’s scheduled exit from the EU coming into sharper focus, companies and shareholders considering a listing are likely to put plans into action sooner rather than later.”
For further information please contact:
Katy Broomhead, Corporate Communications
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KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 13,500 partners and staff. The UK firm recorded a revenue of £2.07 billion in the year ended 30 September 2016. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. It operates in 152 countries and has 189,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.