London's initial public offering (IPO) market has got off to a steady start in 2018, according to new figures, with a flurry of floats in the financial services sector helping the capital retain its title as a global financial hub.
Battling volatility and "pricing pressures", according to EY, London scored 16 IPOs across its main market and the junior Aim in the first quarter of 2018. A hefty majority of these, at 11, were in the financial services sector.
Though the number of floats was down 38 per cent on the same period last year, the amount they generated in proceeds climbed marginally by six per cent to £1.296bn. EY's IPO Eye report added that the fact that only one of the nine main market listings was backed by private equity held back the total proceeds.
“Although the market may remain low-key overall, the IPO pipeline is currently still looking strong for small main market listings and Aim listings," said EY's IPO head Scott McCubbin.
"We expect to see some of the delayed listings from this quarter to come on stream in Q2 and activity to peak in Q3 for this group of companies.
There are some signs of more listings from larger companies anticipating more significant deal sizes, but this part of the market is very much waiting for a first-mover to lead the way.
As well as dominating the IPO market in terms of float numbers, the financial services sector also scooped 51 per cent of the total proceeds raised in the quarter. Businesses such as Integrafin Holdings, which provides its Transact investment platform services to financial advisers, funds administrator JTC and fintech bank Trufin helped to tot up the total as they took to the public markets.
The nine main market IPOs raised a total of £1.147bn, while the seven flotations on Aim raised £149m in total. Cross-border floats accounted for 26 per cent of listings and 58 per cent of proceeds in the whole of 2017 – a proportion which EY expects to grow this year as businesses "look to take advantage of the period of expected calm ahead of Brexit".
Globally, IPOs have raised $42.8bn (£30.4bn) in the first quarter of 2018 – a 28 per cent increase compared to the same period last year. As in London, volume was down 27 per cent on the same time last year but from a 10-year high.
"The outlook for 2018 looks to be promising driven by strong equity markets and sound corporate earnings," said McCubbin. "Despite expected interest rate hikes later this year and uncertainty around potential trade policies, steady investor confidence is encouraging a healthy pipeline across sectors and markets.”