Listing momentum continues into Q2 2021 as AIM activity returns to historic levels

Listing activity on the London markets has maintained the momentum witnessed in the previous two quarters with another strong quarterly performance on both the Main Market and AIM, according to EY’s latest market tracker IPO Eye.

The Main market hosted 10 IPOs, raising £3.1bn and a further 13 companies were admitted to AIM raising £664m. Funds raised in the first half of the year totalled £9.4bn, making 2021 the best half year IPO fundraising performance since H1 2014.

Q2 AIM activity returned to historical quarterly levels, helped by its biggest ever listing with Formby-headquartered online bathroom supplier Victorian Plumbing Group plc raising £298m and being admitted to trading with a market capitalisation of £850m.

Across both markets listing activity in the quarter has been driven by the technology sector and tech enabled businesses, together with strong performances from healthcare and life sciences.

Cross border listing activity has continued, with five international issuers seeking to list in London, and 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 for funds raised via IPO.

It has also been a strong quarter for follow on fundraising by existing issuers with over £9bn being raised in the quarter, again ahead of other European markets, with a total of £27bn of equity capital being raised in London in the first half of the year.

Mark Clephan, Partner for EY’s North Corporate Finance Team, said: “This is the third busy quarter in a row for the UK markets, with high levels of activity on both the Main Market and AIM and there appears to be no let-up in activity in sight for the remainder of 2021.

“Whilst activity in the tech sector has dominated listings in recent quarters, we are starting to see companies from more traditional sectors consider a return to the public markets as the wider economy recovers from the shock of COVID-19 and this should increase overall deal volumes. As ever, investors will continue to scrutinise potential issuers with business models, governance and ESG playing a key role in the investment decision.”

Global IPO activity continues apace

Global equity markets have also had another busy quarter, with $111bn being raised in 599 deals across the globe, making this the best six-month listing performance for over 20 years.  Nasdaq remained the leading global exchange with 90 IPOs and proceeds raised of over $24bn.

Over a quarter of global IPOs were in the tech sector with healthcare issuers coming second. These two sectors combined accounted for more than half the proceeds raised globally in the quarter.

US focussed special purpose acquisition company (SPAC) listing activity has cooled down significantly from the record levels witnessed in Q1, following US regulators issuing accounting guidance. That said, there are more than 400 SPACs currently listed that need to consummate a deal before they exceed their two year lifespan and this will have some impact on the IPO environment in the near term – both in the US and more widely.

Helen Pratten, Strategy and Transactions Partner concluded: “Following the usual summer break we are expecting IPO activity to continue at pace through to the year end and beyond, with pipelines full of deals slated for the second half of the year.

“Later this year, we will also see the introduction of the first rule changes from the Hill Review which is designed to make the UK markets more attractive to a wider range of issuers. This should hopefully increase deal volumes, but in the short term we can also expect competition from SPACs to have an impact as they seek to close transactions before they run out of time.”