IPOs

U.K. Companies’ IPOs Lag on Pre-Brexit Fears

IPOs by companies based in Britain have raised only $1.53 billion in the first three months of 2017, the lowest level since 2012.
Matthew HellerMarch 29, 2017
U.K. Companies’ IPOs Lag on Pre-Brexit Fears

Pre-Brexit uncertainty is proving to be a drag on stock market flotations by U.K. companies, with the value of initial public offerings so far this year dropping to its lowest level since 2012.

According to Thomson/Reuters, IPOs by companies based in Britain have raised $1.53 billion in the first three months of 2017, a 28% decline on last year. So far this year, only eight British companies have gone public, the slowest start since 2013.

“The caution in Britain contrasts sharply with the rest of the world where proceeds from IPOs have more than doubled, year-to-date, compared with 2016, to total $29.4 billion, including the flotation of messaging app Snap Inc., which raised $3.4 billion in March,” Reuters noted.

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In 2016, equity raising globally fell by more than a quarter amid geopolitical shocks and a string of failed IPOs. But even though bankers said the outlook for 2017 looked shaky, there have been 302 offerings so far this year, more than any other year-to-date period since 2000.

Since Britain voted to leave the European Union in June 2016, the value of IPOs has declined 54% and the number of deals has fallen by 30%, the Thomson/Reuters data showed.

London is set to begin the process of leaving the European Union on Wednesday and with elections in France and Germany later this year, “the number of suitable windows to launch IPOs in Britain and Europe is expected to be limited,” Reuters said.

The Financial Times recently reported that financial software developer Misys is exploring going public in New York after recently scrapping a planned 5.5 billion pound ($6.9 billion) London float at the last minute. It would have been London’s largest tech stock IPO.

“A decision to opt for New York instead of London would reinforce concerns about the post-Brexit status of the U.K.’s financial center,” the FT said.