More Small Companies Launch IPOs on London Market

The volume and value of initial public offerings (IPOs) on London’s junior market increased last year as small to medium-sized enterprises (SMEs) sought funding for growth, according to data from Experian.

The global information services company recorded 75 IPO transactions on the London Stock Exchange’s (LSE) Alternative Investment Market (AIM) last year worth a total of £2.5bn (US$3.85bn/€3.43bn), an increase in value of 134% on 2013.

“IPOs on AIM provide an opportunity for SMEs to seek growth funding, while the increased activity will also encourage business owners looking for an alternative to a sale,” comments Experian.

Wholesale and retail was the most active sector, contributing 41% to the overall value of transactions, followed by manufacturing (34%) and the information and communication sector (24%). Finance and insurance services was the third most active sector on London’s junior market in 2013, contributing 30% of the value, but only ranked in fifth place last year, accounting for 12% of the total transaction value.

The volume and value of IPOs on the LSE’s main market also increased last year. The number of IPOs rose 43% from 40 to 57, while the total value rose to £12bn, up 12% from £10.6bn recorded in 2013. This was the highest level of volume and value recorded on London’s main market since 2007. Large IPOs worth more than £100m dominated the main market, and private equity investors were involved in 20 of the large transactions, accounting for £7bn of the total.

Financial and insurance services was the most active sector on the LSE last year, raising £5.5bn through 39 deals, followed wholesale and retail, which completed 32 transactions worth £5.5bn combined, while the information and communication sector completed 27 transactions worth £3.3bn.

“The growing number of IPOs on the AIM suggests smaller businesses are increasingly considering listing as an option to secure the funding they need to take their company to the next level,” said Wendy Driver, business development manager at Experian UK&I.

“Business owners may be curious about what their company could be floated for and should look back at IPOs of companies similar in size and sector in previous years to decide whether it’s an option they wish to explore further.”

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