IPOs to hit record £18.5bn high in 2014

Research by Capita Asset Services says IPOs in the UK market are expected to hit record highs this year.

Capita Asset Services is responsible for administering over 60 per cent of the IPOs in the UK market in the current year.

The UK market has shown signs of a strong “bounce back” in 2014, according to Capita, with overall IPOs set to more than double from the £8.3bn raised over the course of the previous year to reach £18.5bn.

£11.6bn has so far been raised in 2014 through a total 92 IPOs across the overall UK market.

Main market IPOs are also set to significantly outpace the previous record of £8.7bn in 2011 with £11.7bn expected to be raised in 2014.

The AIM market has seen far less IPO activity compared to the record 325 IPOs back in 2005. The market has so far staged 55 IPOs but the average amount raised by these companies has hit £32m each, marking the highest average since records began.

Consumer-facing companies have dominated the UK IPO market with 57 per cent of all IPO money raised so far this year coming from consumer industries. The flotation of the AA back in June was the largest IPO in the first of 2014, raising £1.35bn.

Capita Asset Services shareholder solutions chief executive officer Justin Cooper notes that following the IPO “gold rush” in the first half of 2014, companies coming to market during the remainder of the year could face hurdles as fund managers grow more cautious.

He says: “Despite a strong start, and a surprising summer flurry of flotations, those hoping to come to market in the latter half of 2014 are having to contend with a cocktail of flat markets, weak earnings and poor dividends.

“With a number of IPOs failing to meet expectations, enthusiasm amongst fund managers is lower than at the start of the year, and has allowed them to be more discerning as they approach the offers on the table. Indeed this fear of market saturation recently led to several companies, including Hungarian budget airline Wizz Air, to withdraw from the field.”

However Cooper believes that a backdrop of stronger economic growth should help to spur further growth in the UK IPO market well into 2015. He adds: “But that said, the economy is strong, and continuing to strengthen, and there’s still a steady stream of private owners looking to exit their business.

“It’s also no coincidence consumer companies are dominating the picture as spending in the UK has picked up sharply. We are a long way ahead of where we were just 12 months ago, and 2015 will likely be even stronger.”