Proactive Investors - Two companies were listed on London's stock market in the past quarter but a potential bounce is expected at the turn of the year and into 2025 as there are reported to be a growing number of companies preparing for an initial public offer in the UK.
New London listing rules came into force during the past quarter, which are expected to help encourage more IPOs in the Square Mile, while the UK autumn statement and US election could also be final shoes to drop for the IPO market.
A pick-up in IPO activity in the final three months of the year is anticipated by accountancy giant EY, which reported an "improved deal pipeline".
This followed the arrival of Rosebank Industries PLC, where £50 million was raised on AIM in July, and Aberforth Geared Value & Income Trust PLC, which listed on the main market with a £14.8 million fundraising in August.
This means that just 10 companies listed in the first nine months of 2024, drumming up a total of £584.6 million, down 47% compared to the same period in 2023.
However, this week we had confirmation from one more company, Applied Nutrition, that it intends to list on the main market later this month.
"As we enter the final quarter of 2024, we anticipate some pick-up in IPO activity," said Scott McCubbin, EY's UK IPO chief, but he added that the timing of these flotations could slip into early 2025.
"Continued geopolitical instability in Ukraine and now the Middle East adds to the timing uncertainty but is supported by the backdrop of an improved deal pipeline," he said.
On the new measures to simplify the UK listing regime, McCubbin said these are aimed at making London more attractive for businesses seeking to go public.
"These reforms have been largely welcomed but it remains to be seen how quickly they will have a material impact on listing activity this year," he said.
McCubbin said the third quarter is typically a slow period for listings and the UK general election "offered some clarity on regulatory and policy matters" but "many businesses considering IPOs are still holding off". T
He said firms are awaiting potential reductions in interest rates as inflation stabilises, as well as the outcome of the Chancellor’s Autumn Budget and the US election in November.
EY research found global IPOs were more resilient, despite elevated uncertainty and market volatility.
In total, 310 IPOs raised US$24.9 billion in the third quarter of the year, outpacing IPO performance in the first two quarters of 2024.