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Companies are taking advantage of record highs for the FTSE 100 to raise cash at the fastest rate in three years, even as the number of new listings in London remains subdued.
The volume of follow-on transactions, in which investors in listed companies offload significant chunks of their stock, has already reached $11.5bn this year, according to data from the London Stock Exchange Group. That’s the fastest start to the year to late May since the boom year of 2021, and includes 110 such follow-on issuances.
Initial public offerings in London have only raised around $148mn so far this year across four transactions, the LSEG data show, all minor deals.
While other exchanges in Europe have hosted larger IPOs this year, including secondary transactions has made London the most active exchange in the region.
“London stands head and shoulders above other markets so far this year in terms of volume of equity placed — without completing one major IPO yet,” said Andreas Bernstorff, head of Europe, Middle East and Africa equity capital markets at BNP Paribas.
Many companies and investors have sought to generate cash from positions that are no longer core to their strategies, including shareholders of the London Stock Exchange Group itself.
A consortium of investors have been gradually offloading billions of pounds worth of shares in LSEG that they acquired as part the stock exchange’s $27bn purchase of data and trading group Refinitiv in 2021.
In the latest deal in mid-May, those investors including the private equity group Blackstone sold a block of shares representing about 3 per cent of the company, or nearly $2bn. The deal offered the shares at 1.1 per cent above the market price, a rare instance of a block trade being offered at a premium rather than a discount. Other large blocks include sales of the consumer health group Haleon’s shares by GSK and Pfizer.
“On the back of a strong bid from investors for high-quality assets and the strong performance of blocks last year, this has turned out to be a unique window where large, strategic blocks held for many years have come loose,” said Aloke Gupte, co-head of international equity capital markets at JPMorgan.
The total amount of equity issuance in London this year does not include National Grid’s plans to raise £7bn to help strengthen its electricity networks in the US and UK.
The buoyant conditions in London have been in marked contrast to the market’s ongoing struggle to attract IPOs. Raspberry Pi, a maker of tiny computers, is expected to come to market next month although the fundraising is likely to be small.
Larger multibillion transactions such as the Swiss listing of skincare specialist Galderma and Amsterdam IPO of private equity group CVC have taken place elsewhere in Europe.
The rebound comes after a rush of IPOs during the pandemic, when low interest rates fuelled a surge of activity. Some of those listings have since disappointed, such as the UK’s food delivery group Deliveroo and bootmaker Dr Martens.
“We are in the early stages of a European IPO recovery — it hasn’t arrived in the UK yet — but that’s just a question of time and fading memories of a disastrous 2021 vintage,” Bernstorff added.
