Various high-profile companies that have seen surging online demand from home customers during Covid-19 lockdowns have revealed eye-catching plans for the initial public offerings (IPOs) in recent weeks.
Clarity over Britain’s final departure from the European Union on January 1 has served as a catalyst for many companies to raise funds, experts say, while the rollout of Covid-19 vaccines has also allayed concerns investors regarding the deadly pandemic.
So far this year, acclaimed shoemaker Dr Martens, meal delivery service Deliveroo and online greeting card seller Moonpig have all showcased their projects.
– Confidence continues to grow –
“Looking at the year ahead, we can expect 2021 to be a very good year for the UK IPO market,” said Scott McCubbin of London-based financial services giant EY.
“An increase in IPO activity may well increase competition for investment, with more emphasis on early preparation for IPO and improving investor visibility.
“Confidence continues to grow with the Brexit deal which now clarifies future relations with Europe and the rollout of Covid-19 vaccinations.”
On top of that, online money transfer specialist TransferWise has reportedly appointed banks to coordinate a planned float.
UK media are reporting that others could include insurer Canopius, EDF-owned electric vehicle charging company Pod Point, and online fashion retailer Very.
The IPO market has also attracted interest in recent years due to the ease of access to finance, as well as extremely low interest rates.
– ‘Ideal for IPOs’ –
“In recent years, we have also seen an increase in the funding available to UK and European companies in the early stages of their growth,” said Marcus Stuttard, head of UK primary markets at the London Stock Exchange.
“This means that there are now a growing number of dynamic companies at the stage and size of development that are ideal for an IPO.
“These factors together have contributed to the strong IPO pipeline that we are seeing at the start of 2021,” he told AFP.
At the same time, investors have plenty of cash, owing to low borrowing costs and several billion pounds of central bank stimulus funds.
London thus hopes to steal a march on competing destinations on the stock exchange such as Frankfurt, Hong Kong and New York.
Britain ranked only behind China and the United States in terms of the total amount of cash raised on the stock market last year, according to a recent EY study.
British capital represented more than 40% of the total IPO amounts raised in Europe.
Brexit could provide new momentum as the government wants to relax some stock market regulations as it seeks to attract more high-profile companies to the list.
The Brexit trade deal, which went into effect on January 1, did not concern the financial sector – but Britain and the EU intend to seal a memorandum of understanding on financial services from here March.
The City of London Corporation revealed in a study on Friday that the British capital still lags behind the United States and Hong Kong in attracting foreign companies.
London now wants to compete more effectively with its European rivals and EU officials fear getting rid of highly prized standards.
Catherine McGuiness, Political Chairman of the City of London Corporation, said: “The competitive strengths of London and the UK should mean that we are well positioned to seize opportunities as we begin a new business chapter outside of the UK. European Union.”