UK IPOs hit the buffers as global uncertainty weighs on confidence

Flotations on the London Stock Exchange so far this year have raised less than a tenth of the previous year’s total as appetite for initial public offerings (IPOs) continues to wane.

12 IPOs on the main market raised £308 million between January and March, while seven admissions to the Alternative Investment Market (AIM) raised £89 million, data from consultancy EY showed.

In contrast, there were 12 IPOs on the main market and two on AIM in the same period in 2021, which raised a combined total of £5.6 billion – 14 times higher than this year’s opening quarter.

Scott McCubbin, UK and Ireland IPO leader at EY, said the London market had experienced a difficult start to the year.

“There are strong headwinds as a result of the war in Ukraine, high energy and commodity prices alongside inflationary pressures and associated interest rates rises which are ultimately creating uncertainty for the future cash flows of businesses looking to float,” he said.

This, added to supply chain issues, would lead to a weaker market in the second quarter as well, he predicted.

“We will hopefully see a return to a stronger equity market later in the year, although this remains at risk given the uncertain geopolitical and macroeconomic landscape,” McCubbin said.

The largest main market IPO in London during the first quarter was New Energy One Acquisition Corp, which raised £175 million. The largest AIM admission was Clean Power Hydrogen which raised £30 million.

Last week, Cordiant Global Agricultural Income became the latest company to put a planned listing on hold due to concerns about the global economic climate.

Cordiant Global Agricultural Income, which provides “investment finance to large and medium scale agricultural producers”, said it would pause its $300 million float.

Globally, there were 321 IPOs in the first quarter of the year, down 37% year-on-year. Listings raised $54.4 billion, which was a 51% decline compared to the same period in 2021.