The UK stock market is likely to enjoy a record year for flotations in 2014 with more companies planning initial public offerings (IPOs) despite recent signs of investor fatigue.
According to Thomason Reuters data, 40 companies raised £5.7bn in the first five months of 2014. The total surpasses the previous record of £4.9bn for the same period in 2007, while the equivalent figure for 2006, which became the all-time record year for UK flotations, was £2.9bn.
By the end of 2006, 134 companies had raised £12.1bn. Despite a strong start the following year the total for 2007 fell to £10.7bn and plunged to £505m in 2008 as the global financial crisis unfolded.
Year-to-date figures for 2014 do not include Lloyds Banking Group’s decision to sell a quarter of the shares in its TSB business. The shares will be sold at between £2.20 and £2.90 each, valuing the business based on the mid-point of the range at £1.28bn.
The sale was forced on Lloyds by the European Union after the UK government waived competition concerns to let Lloyds rescue HBOS in early 2009.
The market responded enthusiastically to a slew of IPOs in the first few months of this year as investors threw off years of caution in search of companies that could benefit from the recovering UK economy and returning consumer confidence. Retailers and online businesses were high on fund managers lists.
This initial enthusiasm has more recently cooled, with investors becoming wary of the valuations placed on companies by their sellers, which are often private equity firms seeking to unload businesses they bought before the financial crisis.
Casualwear retailer Fat Face withdrew a planned IPO last month after investors refused to meet the £400m-plus price demanded by the private equity owners. Saga, the over-50s insurance and travel business, was forced to value the company at the bottom of a price range its buyout firm owners had already reduced in response to pressure from investors.
A report by broking group Marsh examines the repercussions from the administration of the South Korean company, which filed for bankruptcy protection at the end of August.
Global research by C2FO suggests that smaller businesses are less concerned with the repercussions of Brexit and the upcoming US presidential election.
A squeeze on skilled talent means it now takes an average of seven weeks to fill open permanent roles in finance in the UK according to new research from financial services recruitment firm Robert Half.
Early-stage merger and acquisition deals in Asia-Pacific show nearly 10% year-on-year growth in recent months.