BDO spots buoyant UK IPO market

Jonathan Boyd

Accountant and advisory firm BDO says recent research into the views of institutional investors with over $10trn under management points to a buoyant IPO market in the UK.

Over three-quarters, 76% of the 116 investors surveyed in December said they expect the number of IPOs on London’s Alternative Investment Market (Aim) to increase or remain unchanged. At the same time some 77% said they expect the same for listings on the main market.

Overall, the UK is still seen as an attractive country for equity investments, just behind China, then Germany, Japan and the most favoured destination, which is the US.

Chris Searle, Capital Markets Partner, said: “Despite all the uncertainty, global investors continue to rank the UK as a key place to do business. This positive sentiment is particularly welcome given the number of floats that failed to make it to the market last year.”

Key drivers identified behind the pipeline of IPOs include the lack of bank funding in the UK, which is forcing companies to raise money in other ways.

In terms of the sectors the investors surveyed saw as most attractive for IPOs, they picked technology (51%), consumer goods (36%), financials (33%) and healthcare (30%).

Size is less of a driver of preferences: some three-quarters said that small and mid-cap companies were important for future economic growth in the UK, but just 28% said they saw this type of company as more attractive in the coming 12 months. More, 67%, preferred companies with market cap over £300m as more attractive.

Searle said: “Evidently we are still seeing a gap in attitudes towards investing in smaller versus larger companies. Yet certainly in as far as technology is concerned, the vast majority of UK businesses in the sector are small so it will be interesting to see how investors deal with that. The important issue is that markets such as AIM continue to build on the momentum they have established attracting investors into the UK and building overseas support for UK businesses.”