The UK has exceeded Europe in IPO activity as political uncertainty continues to disrupt global deals, a new report has revealed. Snap elections in France and the forthcoming US presidential election have heightened anxiety among investors and dealmakers.
While global stock market debuts have been affected by political uncertainty, the UK has outperformed its European counterparts with a flurry of activity this year. Equity capital market activity, including initial public offerings (IPOs), was on the rise earlier this year but has slowed down in recent months. An IPO occurs when a company offers its shares on the public stock markets.
Data from Dealogic showed that global IPO and other stock market debuts totalled around 531 billion US dollars (£398 billion) in the first nine months of the year, a nearly 12% increase compared to the same period last year. However, deals in the latest quarter, from July to September, dropped by more than a fifth compared to the period between April and June. This slowdown indicates a significant deceleration in what initially seemed like a year of recovery for global IPOs.
The UK has shown a stronger rebound since stock markets faced a lack of IPO activity, combined with several UK-listed companies being acquired or moving to foreign markets. In the UK alone, deals surged by 48% to reach 26.1 billion dollars (£19.6 billion) in the first nine months of the year, marking a stark contrast to the same period last year.
Uncertainty surrounding the snap elections in France prompted dealmakers and investors to hold back, resulting in the worst quarter for European IPOs since the beginning of 2019. This contrasted with the UK’s performance as political uncertainty caused a decline in activity across Europe.
Notable IPOs in London this year included Raspberry IPO, a budget computer firm with a valuation of approximately £540 million. MicroSalt, a salt producer, and Kazakhstan airline Air Astana made their debut in February, while Jersey-based finance firm Rosebank Industries listed its shares in July. Additionally, JD Sports-backed supplements firm Applied Nutrition stated this week that it is contemplating an IPO in London.
Samuel Kerr, head of capital markets at Dealogic, highlighted, “The slowing in deal flow coincided with an uptick in equity market volatility in August and nerves around this year’s snap French elections alongside the upcoming US elections. With global interest rates now falling, there is further impetus for equity deals, but dealmakers and investors alike are keeping a close eye on the November polls.”