London’s initial public offering (IPO) market proved to be resilient in 2020 despite the threats of Brexit and COVID-19, allowing it to beat out its European peers, according to a PwC report released on Thursday.
The London Stock Exchange was the most active market with £5.5bn (€6.1bn, $7.55bn) raised in the year to 9 December 2020 compared to £5.9bn in 2019. The listings were mostly made up of financials and industrials, raising around 95% of the total this year. While London’s IPOs values are slightly down compared to 2019, some are due to be completed in the last weeks of December, which will push the figure higher.
European IPOs, in contrast, reached almost £18.36bn, down approximately 10% compared to 2019, in which roughly £20.3bn was raised.
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“Further offers have featured prominently in UK capital markets activity in 2020, however it’s positive news that amid the uncertainties, London has proven to be a resilient market for IPOs,” said Lucy Tarleton, capital markets director at PwC UK. “Despite a subdued start, we’ve seen activity pick up towards the end of 2020 — especially in Q4 — and expect a strong finish to the year.”
In the year ahead, e-commerce, technology, financials, and renewables are expected to be particularly active. Despite Brexit, the city still attracts a number of cross-border IPOs as well, including the Global Depository Receipt by Kazakhstan fintech company Kaspi.kz (80TE.L), Lithuanian utilities company AB Ignitis Grupe, and China’a Yangtze Power (CYPC.IL) via Shanghai-London Stock Connect.
“Looking ahead, the strong finish to the year is building a solid pipeline for 2021,” said Mark Hughes, capital markets partner at PwC. “Critically, we are also seeing progress on the COVID-19 vaccine rollout and should soon have greater clarity on the future of the UK-EU trading arrangement, both of which provide a positive backdrop to the IPO markets as we head into 2021.”
Still, the UK and European IPO markets is dwarfed in size to their American counterparts, with roughly £60.89bn of market debuts this year, according to Refinitiv data. Some massive tech sector valuations that benefitted from the online shopping and food delivery trend spurred on by COVID-19 include DoorDash (DASH) and AirBnB (ABNB), both respectively reaching 70% and 115% on their first day of trading in New York.
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