Investment themes: IPO boom in London
But will it last as UK equity funds see outflows?
The first nine months of 2021 have seen 85 IPOs in London – 43 on AIM and 42 on the main board – the strongest showing since 2014, when 100 IPOs came to market in the first nine months (9M14).
Only the US and Chinese markets have raised more capital than London during this period. Including follow-on offerings, $55bn has been raised, which is 27% of the equity capital raised in Europe during 9M21.
There is a clear political and regulatory will to make London more competitive as a listing destination. However, we still see continued outflows from UK equity funds, with Emerging Portfolio Fund Research (EPFR) stating that despite overall inflows, UK-focused funds saw outflows of $9.4bn year to date, the sixth year of outflows.
This does lead to questions about the sustainability of the London IPO market. There are signs, particularly in the small- and mid-cap sectors, that emerging clusters of companies in areas like video gaming, fintech and e commerce are creating an ecosystem that allows investors to benchmark and value them at levels that make the UK competitive with the US as a listing destination.