Record-breaking IPO activity in Q3 as year-to-date funds raised exceed 2020 total

Listing activity on the London markets has maintained the momentum witnessed during the first half of the year, with a record-breaking quarterly performance on both the Main Market and Alternative Investment Market (AIM), according to EY’s, IPO Eye.

The Main Market hosted 14 IPOs, raising £2.9bn with a further 19 companies admitted to AIM raising £1.1bn in Q3. Funds raised in the first nine months of the year totalled £13.4bn, exceeding the total IPO proceeds of £9.3bn generated in 2020.

The financial services and healthcare sectors have contributed the largest IPOs in the quarter. The Main Market also saw the £8bn direct listing of major technology company, Wise plc, signalling a vote of confidence in the UK market by the tech sector.

AIM activity in the third quarter of the year returned to historical quarterly levels, helped by its biggest ever listing, Revolution Beauty Group plc raising £300m and being admitted to trading with a market capitalisation of £495m.

Cross-border listing activity has continued, with eight international issuers seeking to list in London in the first nine months of the year. Whilst the UK has retained its position as the leading European IPO venue by funds raised, globally it is third place behind the US and China.

It has also been a strong quarter for follow on fundraising by existing issuers with over £8bn being raised in the quarter, with over £21bn of equity capital being raised in London year-to-date.

Mark Allcroft, (pictured) Strategy and Transactions partner for EY across the North East and Yorkshire, said: “The UK markets continue to witness record-breaking IPO activity, with both the Main Market and AIM already generating higher IPO proceeds this year than for the whole of 2020.

“Looking ahead, we expect deal volumes to continue to be strong through the remainder of 2021 as the economy maintains momentum after reopening post-pandemic albeit with a degree of tension as a result of supply chain issues and the reduction in COVID-19 Government stimulus packages.”

Global IPO activity continues apace

Global equity markets have also had another busy quarter, with $106bn being raised in 547 deals across the globe, making this the best nine-month listing performance for over 20 years. Nasdaq remained the leading global exchange with 75 IPOs and proceeds raised of $18.6bn.

The quarter saw 19 mega IPOs (with proceeds greater than $1bn), between them raising $38bn, the largest of which was the IPO of Shanghai Telecom Corp., Ltd on the Shanghai Main Board, raising $7.3bn.

From a sector perspective, technology, healthcare and industrials once again rose to the top of the pack retaining their firm grasp on investor attention. For the fifth consecutive quarter since Q3 2020, technology generated the highest year-to-date number of deals (419), raising the highest amount in proceeds for the sixth consecutive quarter, from Q2 2020 (US$116.4bn). Healthcare followed with 287 IPOs raising US$49.2bn by proceeds, and industrials came in third with 204 IPOs raising US$35.3bn by proceeds.

US-focused special purpose acquisition company (SPAC) listing activity has continued to cool down from the record levels witnessed in Q1, following US regulators issuing accounting guidance. There has also been limited activity between the Western markets and China, with a complete halt of cross-border IPOs from China into the US markets since mid-July due, in-part, to the political tensions between the countries.

Helen Pratten, Strategy and Transactions Partner, commented: “Activity on Global markets continues to be very strong, with record levels of proceeds generated so far this year.

“Global growth has been driven by the pick-up of activity in EMEIA, which has experienced significant growth and increased its share of global IPO deals so far this year. There remains a very healthy pipeline and IPO windows remain open. IPO candidates should continue to focus now on readiness activities to ensure they have the right talent and IPO resources in place, whilst continuing to be aware of alternative financing routes.”