Investing in all 70 London IPOs this year would have yielded a 42% return

Inflation worries are sapping stock hopes, but 2021 has turned out to be a good year for City of London floats, David Buik said.

The city’s seasoned commentator, currently at Aquis Exchange, said an investor who took an equal stake in just over 70 UK IPOs this year would have achieved a 42% return.

He looks at why the flotations are back in London and there may be more to come.

Equity markets are starting to experience occasional bouts of excessive volatility, suggesting that valuations are starting to get a bit foamy and rich for some investors.

There is a certain degree of neurosis, which has caused investors to take risks.

A scent of fear permeates global stock markets, which could trigger a modest correction in the weeks to come.

Inflation, a blockage in the supply chain and Covid’s refusal to back down are among the contributing grounds for concern.

However, it’s time to think about how the City of London has competed for IPOs, both domestically and internationally so far this year.

There have been just over five years of pent-up demand since the Brexit vote, where the UK stock market has become an unattractive place to raise capital.

The absence of the big American names is, in part, due to the exhaustion of the specialized capacities of raising capital among the large multinational banks.

Raising money in the mid-cap space requires in-depth knowledge of the institutional investor base.

If investors had taken an equal stake in just over 70 UK IPOs this year, they would currently have a 42% return, more than 4 times the FTSE all Share.

This is a particularly interesting effort, as there is no doubt that underwriting debt securities through private equity is a much cheaper method of raising capital than capital markets or public offerings. initials.

Despite all the reluctance over Brexit and President Macron’s charming offensives to lure business from London to Paris, or Amsterdam or Frankfurt, the “City” has given itself an excellent account this year.

Regulatory reform is urgently needed to make raising capital in the UK simpler and easier.

The UK’s new freedom to deviate from EU financial regulations will eventually provide the opportunity to create a regime that does just that.

The UK has lost a few IPOs to New York and recently the successful 30 billion euro launch of Universal Music, which rose to a 35% premium in Amsterdam this week.

Despite these disappointments, London remains steadfast.

Above all, the “City” provides the best legal advice. British law is almost omnipotent on a global scale and there is no doubt that this “crown jewel” has been of immense benefit to advisory banks.

There is no doubt that Xavier Rolet, as CEO of the London Stock Exchange, and his team really put London on the map as a force majeure during his tenure between 2009-2017. Its share price rose from 635 pence to 3,646 pence, an increase of 474%.

Today, the London Stock Exchange is in the hands of David Schwimmer and its share price has reached 7,974 pence!

I salute the efforts of the main stock exchange, that of its branch AIM and Aquis Stock Exchange, for which I work.

The success of the American and European investment banking titans over the past few months is being seen as a read.

However, great credit goes to Numis, Peel Hunt (soon for its own IPO), Panmure Gordon, Canaccord, Robey Warshaw, Cenkos, Liberum, WH Ireland and many others for “grabbing the nettle” by advising their mid cap and small cap clients opt for an IPO, as well as providing other forms of funding for the economic recovery.

Bridgepoint, Wise, Darkforce, Mothercare, Moon Pig, Dr Martens, Made.com and Wickes were among the major newbies in the market.

Deliveroo’s £ 8bn IPO got off to a rocky start, initially losing 25% of its value, but has recovered and is 10% above its issue price.

There is more to come in the next few months. EG Group, Oxford Nanopore Technologies, Jaguar Land Rover, BrewDog, Monzo, Starling, McLaren Group and Virgin Atlantic are exploring their options, assuming market conditions remain favorable – often the key to a successful business. Initial Public Offering !

Aquis Stock Exchange, as an alternative to the established LSE / AIM market, has been responsible for 17 IPOs this year.

Aquis Stock Exchange is distinguished by its engaged approach with companies and advisers, proper regulation and straightforward process, which saves time and money.

Aquis is also unique in prohibiting short selling (for additional protection of our growing businesses) and its market making program which targets a 5% spread and has reduced the spreads in our growing market by over 50%. until now. Aquis believes that being able to access retail investors with a risk appetite is important to improve liquidity and shareholder records.

AQSE’s recent IPOs include the China-focused e-commerce firm, Samarkand, and specialist investment bank VSA Capital Group.

The City of London is alive and well.