ey ipo eye: an overview of the london stock exchange listings in q4 2016, aim · pdf...

IPO EyeAn overview of the London Stock Exchange listings in Q4 2016

AIM listings keeping the UK IPO market’s light on

1 IPO Eye An overview of the London Stock Exchange listings in Q4 2016

UK IPO highlights4Q16 YTD(January–December 2016)1

Key trends Commentary

Financial sponsors continue to drive UK IPO market

Top three IPOs in 4Q16 by capital raised

Italy had two deals; US, Guernsey and Malaysia had one deal each, raising GBP£91.1m altogether on AIM.

Israel and Philippines had one dealeach, raising GBP£5.4m altogether on the London Main Market.

Cross-border activity in 4Q16 YTD4

Three sectors trending

“�Volatility�in�the�markets�and�currency�fluctuations�created�in�the�wake�of political events in both the UK and the US have caused a substantial drop�in�the�value�of�the�pound,�which�further�contributed�to�difficulties�in agreeing upon IPO valuations. All of this in turn led to a number of high-profile�listings�being�withdrawn.�We�anticipate�that�any�return�to�more ‘normal’ IPO activity levels is likely to be delayed until uncertainty has subsided after the Presidential transition has taken place in the US and the UK has formalized its EU exit strategy.”

Scott McCubbinEY UK and Ireland IPO Leader

Volume and value

London Main Market16 deals(52% decrease on 4Q15 YTD)

London Main MarketGBP£4.3b(53% decrease on 4Q15 YTD)

London AIM38 deals(31% increase on 4Q15 YTD)

London AIMGBP£$1.0b(80% increase on 4Q15 YTD)

ConvaTecGroup plc

Civitas SocialHousing plc Biffa plc

raised

GBP£1,587m(UK, Health care)

raised

GBP£350m(UK, Real estate)

raised

GBP£212m (UK, Consumer products and

services)

IPO pricing and performance

PE and VC accounted for24% of UK IPOs (13 deals)

67% of proceeds (GBP£3.6b)

► The UK equity market recovery has stalled in the wake�of�the�EU�referendum,�reflecting�ongoing�uncertainty over the shape of the Government’s EU�exit�strategy,�which�in�turn�has�dented�investor�confidence.

► Uncertainty�and�low�confidence�have�prompted�several�IPO�postponements�and�withdrawals,�with�no immediate revision of transaction timescales, suggesting�2017�will�get�off�to�a�slower�start.

► A�weak�pound�will�underpin�US�and�Asian�investor�interest in UK IPOs, but a resolution of the political uncertainty is required before listing activity�is�likely�to�pick�up�significantly.

FTSE 100

FTSE 350

FTSE AIM ALL SHARE

+13.8%

+11.9%

+14.8%

24%of UK IPOs

London Main Market2 Alternative Investment Market2 Equity indices3

first-day average return+2.8%increase in offer price vs. 30 December 2016+18.1%median post-IPO market capGBP£355.0m

first-day average return+9.4%increase in offer price vs. 30 December 2016+34.5%median post-IPO market capGBP£43.8m

median deal sizeGBP£12.1mmedian deal sizeGBP£196.8m

1. 4Q16 YTD (January–December 2016) IPO activity is based on priced IPOs as of 31 December.2. Pricing and performance is based on 16 IPOs on London Main Market and 38 IPOs on AIM that have started

trading by 31 December. Data as of 5 January 2017.3. Year-to-date returns of equity indices as of 30 December 2016.4. There were seven cross-border IPOs on London Main and AIM in 4Q16 YTD.

Technology9 deals (GBP£0.3b)

Financials6 deals (GBP£1.0b)

Health care6 deals (GBP£1.7b)

2IPO Eye An overview of the London Stock Exchange listings in Q4 2016

UK IPO activity is led by AIM, as a number of Main Market deals are withdrawn

4Q16 Market overview

Uncertainty around the EU referendum and the subsequent decision�to�exit�the�EU�had�a�significant�impact�on�the�UK�IPO�market�in�2016.�The�year�got�off�to�a�slow�start�as�the�first�half�saw�some�companies�delaying�their�plans�ahead�of�the�June�23�referendum. The unexpected vote to leave the EU ensured that this�uncertainty�carried�on�into�the�second�half�of�the�year,�with�a�marked further reduction in the number of deals and particularly in�the�level�of�capital�raised,�making�this�the�slowest�year�for�UK IPOs since 2012.

There�was�however�an�increase�in�activity�as�the�year�came�to�an�end.�Overall�there�were�16�IPOs�in�4Q16,�slightly�higher�than�the�same�period�in�2015,�however�the�capital�raised�was�50%�less�than�2015’s level. This is largely due to the balance being in favour of AIM IPOs in the last quarter.

We�did�see�a�number�of�high�profile�Main�Market�listings�cancel�during�this�period�and�it�will�be�interesting�to�see�if�these�make�a�return once the uncertainty affecting the markets dissipates.

Newly�listed�stocks�in�4Q16�have�outperformed�veteran�assets,�which�are�currently�trading�an�average�of�26%�above�list�price,�with�only�one�stock�with�a�very�small�negative�growth.

There�were�4�PE-backed�IPO’s�in�4Q16.

Main�market�—�7�floats�raised�£2.2bn�in�Q4.�The�largest�was�by�ConvaTec,�who�focus�on�products for managing chronic conditions, including�acute�wound�care,�ostomy�care�and continence products, and infusion devices used in treating diabetes.

AIM — 9 AIM admissions raised £212mn in Q4.The�largest�was�by�Oxford�BioDynamics�which�makes�epigenetic�biomarkers�designed�to accelerate the drug discovery and development process.

Globally, despite a late pick up in activity in some regions, both deal�numbers�and�proceeds�raised�finished�the�year�markedly�lower�than�in�2015.�In�total,�there�were�1,055�IPOs�globally�in�2016,�which�raised�US$132.5bn,�compared�with�1,258�IPOs�raising�US$197.1bn�in�2015�—�a�16%�decline�by�deal�number�and�33%�by�capital�raised.�Not�only�were�there�fewer�deals,�there�were�also�fewer�megadeals.�

In�2016,�there�were�only�21�deals�with�IPO�proceeds�of�more�than�US$1bn,�down�from�35�the�previous�year.�From�an�area�perspective,�Asia-Pacific�was�the�epicenter�of�global�IPO�activity,�dominating in both volume and proceeds raised and the region continues to gain market share.

In�2016,�Asia-Pacific�exchanges,�driven�by�Greater�China,�accounted for 60% of the global number of IPOs and 54% of proceeds raised, a third successive year of global market share gains by deal number and second successive year by capital raised. EMEIA exchanges ranked second, accounting for 27% by global�deal�number�and�28%�by�proceeds.�EMEIA�saw�a�slight�drop�in global market share by deal number in 2016 but a larger drop by proceeds�compared�with�2015.�In�contrast,�the�Americas,�which�is�dominated by US activity, lost global IPO market share for the third year�in�a�row�and�accounted�for�only�13%�of�total�volume�and�18%�of capital raised.

Top three IPOs in 4Q16 by capital raised


New Issues — Main market

Date of admission Company PE backed

Country of incorporation

Region/s of domicile

Sector Market cap. on admission (£mn)

Funds raised (£mn) Placing price (p) Closing price (after first day of trading)

Closing price (at QTR end)

% change in price

07–Oct–16 MILA RESOURCES plc United Kingdom United Kingdom Nonequity Investment Instruments 1.2 1.1 5 7.5 5.62 112%

20–Oct–16 Luceco Ltd x United Kingdom United Kingdom Electronic & Electrical Equipment 209.0 93.1 130 150 189 145%

20–Oct–16 Biffa plc x United Kingdom United Kingdom Support Services 450.0 212.4 180 180 180.25 100%

31–Oct–16 ConvaTec Group plc x United Kingdom United Kingdom Health Care Equipment & Services 4,390.0 1,484.4 225 224.5 232.2 103%

31–Oct–16 Golden Rock Global plc China China Nonequity Investment Instruments 4.6 1.6 15 17 28.5 190%

18–Nov–16 Civitas Social Housing plc United Kingdom United Kingdom Real Estate Investment Trusts 361.8 350.0 100 103 103.37 103%

15–Dec–16 RM Secured Direct Lending plc United Kingdom United Kingdom Equity Investment Instruments 51.4 50.3 100 103.65 102.77 103%

New Issues — AIM







% change in price

07–Oct–16 Premier Asset Management x United Kingdom United Kingdom Financial Services 133.8 63.7 100.00 136 126 126%

26–Oct–16 Van Elle Holdings plc United Kingdom United Kingdom Construction & Materials 80.0 40.0 100.00 100 126 126%

04–Nov–16 Filta Group Holdings plc United Kingdom United Kingdom Support Services 22.4 6.2 83.00 89 139 168%

14–Nov–16 Angus Energy plc United Kingdom United Kingdom Oil & Gas Producers 12.9 23.0 6.00 6 10 170%

16–Nov–16 FreeAgent Holdings plc United Kingdom United Kingdom Software�&�Computer�Services 34.1 10.7 84.00 87 88 105%

30–Nov–16 Warpaint�London�plc United Kingdom United Kingdom Personal Goods 62.6 23.0 97.00 111 136 140%

06–Dec–16 Oxford BioDynamics Plc United Kingdom United Kingdom Pharmaceuticals & Biotechnology 136.0 20.0 158.00 160 155 98%

09–Dec–16 Creo Medical Group plc United Kingdom United Kingdom Health Care Equipment & Services 61.3 20.0 76.00 80 77 101%

14–Dec–16 ECSC Group plc United Kingdom United Kingdom Software�&�Computer�Services 15.0 5.9 167.00 190 222 133%

What constitutes an IPO? ► Not�all�new�admissions,�as�listed�by�the�London�Stock�Exchange,�are�defined�as�IPOs�for�the�purposes�of�the�commentary�throughout�this�report.�Our�definition�excludes�secondaries,�re-admissions,�investment�funds,�transfers�from�AIM�to�Main�(and�vice-versa)�and�introductions�where�no�money�is�being�raised,�or�shares�placed�with�new�investors.

4Q16 Market listings


New Issues — Main market







% change in price

07–Oct–16 MILA RESOURCES plc United Kingdom United Kingdom Nonequity Investment Instruments 1.2 1.1 5 7.5 5.62 112%

20–Oct–16 Luceco Ltd x United Kingdom United Kingdom Electronic & Electrical Equipment 209.0 93.1 130 150 189 145%

20–Oct–16 Biffa plc x United Kingdom United Kingdom Support Services 450.0 212.4 180 180 180.25 100%

31–Oct–16 ConvaTec Group plc x United Kingdom United Kingdom Health Care Equipment & Services 4,390.0 1,484.4 225 224.5 232.2 103%

31–Oct–16 Golden Rock Global plc China China Nonequity Investment Instruments 4.6 1.6 15 17 28.5 190%

18–Nov–16 Civitas Social Housing plc United Kingdom United Kingdom Real Estate Investment Trusts 361.8 350.0 100 103 103.37 103%

15–Dec–16 RM Secured Direct Lending plc United Kingdom United Kingdom Equity Investment Instruments 51.4 50.3 100 103.65 102.77 103%

New Issues — AIM







% change in price

07–Oct–16 Premier Asset Management x United Kingdom United Kingdom Financial Services 133.8 63.7 100.00 136 126 126%

26–Oct–16 Van Elle Holdings plc United Kingdom United Kingdom Construction & Materials 80.0 40.0 100.00 100 126 126%

04–Nov–16 Filta Group Holdings plc United Kingdom United Kingdom Support Services 22.4 6.2 83.00 89 139 168%

14–Nov–16 Angus Energy plc United Kingdom United Kingdom Oil & Gas Producers 12.9 23.0 6.00 6 10 170%

16–Nov–16 FreeAgent Holdings plc United Kingdom United Kingdom Software�&�Computer�Services 34.1 10.7 84.00 87 88 105%

30–Nov–16 Warpaint�London�plc United Kingdom United Kingdom Personal Goods 62.6 23.0 97.00 111 136 140%

06–Dec–16 Oxford BioDynamics Plc United Kingdom United Kingdom Pharmaceuticals & Biotechnology 136.0 20.0 158.00 160 155 98%

09–Dec–16 Creo Medical Group plc United Kingdom United Kingdom Health Care Equipment & Services 61.3 20.0 76.00 80 77 101%

14–Dec–16 ECSC Group plc United Kingdom United Kingdom Software�&�Computer�Services 15.0 5.9 167.00 190 222 133%


In this quarter

From�a�sector�perspective,�health�care�and�technology�were�the�most active sectors in 2016, each accounting for 13% of deal volume,�followed�by�financials�(11%)�and�energy�(11%).�Health�care�dominated proceeds raised, accounting for 29% of capital raised in�2016,�helped�significantly�by�the�large�size�of�ConvaTec�Group�plc’s�IPO�in�a�year�otherwise�dominated�by�smaller�deals.

ConvaTec�was�the�most�significant�IPO�of�4Q16 and the largest UK listing of the year by a considerable margin.

ConvaTec,�which�focuses�on�products�for�managing�chronic�conditions�and�acute�wound�care,�was�floated�by�its�private�equity�(PE)�owners,�who�will�both�retain�a�stake�in�the�business.

Private�equity�was�active�towards�the�end�of�the�year.�Three�out�of�the�four�Main�Market�listings�in�4Q16�were�PE-backed,�raising�84%�of�the�quarter’s�capital.�This�may�reflect�the�fact�that�PE-backed businesses typically have the scale and expertise to launch their�listings�quickly�when�market�windows�open.�Even�so,�pricing�

continues�to�be�tight.�For�example,�the�pricing�of�PE-backed�waste�management�group�Biffa’s�IPO�in�October�was�lowered�to�help�ensure�the�deal�was�successfully�completed.�From�a�year-on-year�perspective,�however,�PE-�and�VC-backed�activity�was�lower�in�2016 than in 2015. Financial sponsors’ share of deal volume fell to 24% from 35% and their share of proceeds raised declined to 67% from 80% in the previous year.

Main marketWe�saw�seven�Main�Market�floats,�raising�£2.2bn.

Mila Resources, a natural resources sector-focused company, is placed 21,000,000 ordinary shares at a price of £0.05 per share to raise £1mn (before costs), giving the company a market capitalisation of approximately £1.16mn on admission.

IPO Main market: historical performance

5

4

2

8

3

7

2

1

2

1

0

45

2

1

11

8

19

5

3

10

9

2

10

6

4

2

7

0

2

4

6

8

10

12

14

16

18

20

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

No.

of

IPO

s

Fund

rai

se £

mn

20112010 2012 2013 2014 2015 2016

Fund raise £mn

No. of IPOs


Luceco, a manufacturer and distributor of high quality and innovative�LED�lighting�products�and�wiring�accessories,�priced�its initial public offering of 71,629,400 shares at a price of 130 pence�per�share.�Luceco�will�admit�its�entire�issued�share�capital�of 160,800,000 ordinary shares of £0.0005 each to the premium listing segment.

UK-based�waste�management�company�Biffa�plc�was�valued�at�£450mn upon admission. The company issued 118.0 million shares at 180.00 pence per share in its offering on London’s Main�Market.�It�will�also�issue�a�further�27.8�million�shares�at�the�same�price�which�will�be�subscribed�to�by�certain�current�and�former directors of the company, plus members of the senior management team. Total gross proceeds from the listing to go to Biffa�will�total�around�£262mn.�The�net�proceeds�from�the�listing�will�be�used�to�pay�ongoing�legacy�claims�related�to�the�company’s�alleged�tax�avoidance�and�towards�repaying�its�debt�facilities.

ConvaTec Group plc set the price for shares in its initial public offering on the London Main Market at 225.00 pence per share.

The company has sold a total of 659.7 million shares at 225.00p each�and,�based�on�the�offer�price,�will�have�a�total�market�capitalisation�upon�admission�of�£4.39bn.�ConvaTec�will�get�gross�proceeds�of�£1.48bn�from�the�offer,�which�will�mostly�be�used�to�

redeem�or�repay�debt�held�by�the�company.�It�has�been�floated�by�current�owners�Nordic�Capital�and�Avista�Capital�Partners.�Following�the�float,�Nordic�will�own�45%�of�the�business,�whilst�Avista�will�own�around�20%.�ConvaTec�focuses�on�products�for�managing�chronic�conditions,�including�acute�wound�care,�ostomy�care and continence products, and infusion devices used in treating diabetes.

Golden Rock Global plc, a special purpose acquisition company incorporated in Jersey and formed to undertake one or more acquisitions�of�a�target�company�or�business�in�the�fintech�sector,�issued ordinary share capital consisting of 16,000,000 ordinary shares�of�par�value�of�15�pence�each�and�will�be�admitted�to�the�Standard Listing segment of the London Stock Exchange.

Civitas Social Housing plc issued 350 million ordinary shares of 100 pence each to trading on the Main Market of the London Stock Exchange.

RM Secured Direct Lending plc raised £50.3mn on its listing on the�London�Main�Market.�The�fund�will�invest�in�secured�debt,�including loans, promissory notes, leases or bonds, made to UK small- and medium-sized businesses and to mid-cap companies. RM Secured Direct Lending issued 50.3 million shares at 100.00 pence.

IPO AIM market: historical performance

67

8

20

2

13

15

65

11

8 8

5

11

16

19

1618

14

19

6

13

4 4

9

14

4

9

0

5

10

15

20

25

0

200

400

600

800

1,000

1,200

1,400

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

No.

of

IPO

s

Fund

rai

se £

m

2010 2011 2012 2013 2014 2015 2016

Fund raise £mn

No. of IPOs


85.00

90.00

95.00

100.00

105.00

110.00

115.00

120.00

04-0

1-20

16

04-0

2-20

16

04-0

3-20

16

04-0

4-20

16

04-0

5-20

16

04-0

6-20

16

04-0

7-20

16

04-0

8-20

16

04-0

9-20

16

04-1

0-20

16

04-1

1-20

16

04-1

2-20

16

FTSE 100 FTSE 250 FTSE All-Share FTSE AIM All-Share

FTSE indices — 2016 YTD

Source: S&P Capital IQ

AIMThere�were�9�AIM�floatation’s�raising�£212mn�in�Q4.

Premier�Asset�Management,�a�fast-growing�UK�retail�asset�management�group�with�a�focus�on delivering good investment outcomes for investors through relevant products and active management�across�its�range�of�investment�strategies-which�include�multi-asset,�equity�and�absolute return funds-raised £63.7mn on its AIM listing. Premier had £5bn of assets under management as at 30 September 2016.

In this quarter


Geotechnical contractor Van Elle Holdings plc started trading on�London’s�AIM,�having�raised�£40mn�in�its�float.�Van�Elle�has�sold�30.0�million�existing�shares�and�10.0�million�new�shares�at�100.00 pence apiece to raise the funds. Its market capitalisation upon�admission�was�£80mn.�Van�Elle,�based�in�Nottinghamshire,�offers a range of services to UK construction companies, covering the�new-build�housing,�infrastructure,�commercial,�industrial�and�public sectors. It provides site investigation; driven, bored, drilled and augured piling; and ground stabilisation services.

Commercial�kitchen�equipment�services�firm�Filta�Group�Holdings�plc joined London’s AIM market. Filta’s main service is FiltaFry, which�provides�micro-filtration�of�cooking�oil,�vacuum-based�deep�fryer cleaning and fryer management services to commercial kitchens. Its core business operates in the UK and the US, primarily under a franchise model, though its UK arm has both direct sales and franchised operations.

The company also offers a range of other fryer management services,�including�waste�cooking�oil�collection�and�removal�and�new�cooking�oil�supplies,�plus�moisture�absorption�panels�for�refrigeration units.

Filta�raised�£6.2mn�in�the�placing,�with�its�shares�issued�at�83.00�pence�apiece.�Filta�said�it�will�have�27.0�million�shares�in�issue�after�floating�and�has�a�market�capitalisation�of�£22.4mn�upon admission.

UK-focused oil and gas explorer Angus Energy plc raised £3.5mn by placing shares at 6.00 pence apiece. Its market capitalisation upon�admission�was�£12.9mn.�Angus�has�a�55%�interest�in�the�Brockham�oil�field�in�Surrey�and�a�50%�stake�in�the�Lidsey�oil�field�in�West�Sussex,�both�of�which�lie�in�the�Weald�Basin�in�southern�England.�The�funds�raised�will�be�used�to�back�its�share�of�the�development�spending�required�for�the�two�fields.

Accounting�software�firm�FreeAgent�Holdings�plc�raised�a�total�of £10.7mn from its placing by issuing shares at 84.00 pence each,�with�£8.0mn�raised�for�the�company�and�£2.7mn�for�its�selling�shareholders.�Its�market�capitalisation�upon�admission�was�£34.1mn.�FreeAgent�provides�cloud-based�software-as-a-service�accounting�software�and�mobile�applications�designed�specifically�for�UK�micro-businesses,�meaning�sole�traders�or�companies�with�fewer�than�10�employees,�and�their�accountants.

Colour�cosmetics�supplier�Warpaint�London�plc�issued�23.7�million�shares�at�97.00�pence�per�share�to�raise�£23mn�in�the�float.�Its�market�capitalisation�upon�admission�was�£62.6mn.�Warpaint�sells colour cosmetics in the UK and overseas, primarily under the�W7�brand.�Announcing�plans�for�the�listing�earlier�this�month,�Warpaint�said�the�proceeds�from�the�listing�will�fund�raising�its�company�profile�and�will�provide�it�with�greater�access�to�capital�when�it�does�want�to�expand�in�the�future.

Oxford�BioDynamics�which�makes�epigenetic�biomarkers�designed�to accelerate the drug discovery and development process, issued 4.5 million shares at 158.00 pence per share to raise £7.1mn.�Another�8.2�million�existing�shares�were�sold�by�existing�shareholders,�meaning�the�total�gross�value�of�the�placing�was�£20mn.�The�company’s�market�capitalisation�upon�admission�was�around £136mn.

Medical�devices�firm�Creo�Medical�Group�plc�raised�£20mn�via�a�placing at 76.00 pence per share. Its market capitalisation upon admission�was�£61.3mn.�Creo�is�a�Chepstow,�South�Wales-based�surgical endoscopy specialist. It has developed an electrosurgical platform�able�to�deliver�microwave�and�bipolar�radio�frequency�through a single accessory port.

Cyber�security�firm�ECSC�Group�plc�raised�£5.9mn�by�issuing�3.5 million shares at 167.00 pence per share and had a market capitalisation of £15.0mn upon admission.

Bradford,�West�Yorkshire-based�ECSC�announced�its�IPO�plans�in�November.�It�provides�incident�response,�cyber�security�reviews,�technical penetration testing and managed services and counts lender Barclays and UK intelligence service GCHQ amongst its customers.

Aftermarket performanceDuring�4Q16,�we�have�seen�the�markets�affected�by�global�political�situations�with�the�US�presidential�election�having�the�greatest�impact.�However�as�the�year�comes�to�an�end,�the�markets�have�recovered�to�record�highs�with�the�low�value�of�the�pound�continuing to drive investment into the indices.

Newly�listed�stocks�in�this�last�quarter�have�outperformed�veteran�assets,�which�are�currently trading an average of 26% above list�price,�with�only�one�stock�with�a�very�small�negative�growth.

VolatilityVolatility�in�currency�continues�to�hold�back�activity�within�the�IPO�market,�in�particular�on�Main�Market�listings.�This�is�why�we�have�seen�an�increase�in�deal�flow�on�AIM.�As�2017�begins�we�may�see�a�reduction in this.


The�UK�equity�market�has�stalled�in�the�wake�of�the�EU�referendum,�reflecting�ongoing�uncertainty�over�the�shape�of�the�Government’s�EU�strategy,�which�in�turn�has�dented�investor�confidence.�

Uncertainty�and�low�confidence�have�prompted�several�IPO�postponements�and�withdrawals,�with�no�immediate�revision�of�transaction�time�scales,�suggesting�2017�will�get�off�to�a�slow�start.�

A�weak�pound�will�underpin�US�and�Asian�investor�interest�in�UK�IPOs, but a resolution of the political uncertainty is required before listing�activity�is�likely�to�pick�up�significantly.�

Overall�there�were�54�IPOs�on�the�UK�Main Market and Alternative Investment Market (AIM) during 2016; a decline of 13%�compared�with�2015,�with�61%�of�IPO�activity�concentrated�in�the�first�half�of the year.

A year in review — 2016

Proceeds raised fell by 52% to £5.4bn in 2016 from £9.9bn in the previous�year.�The�fourth�quarter�was�particularly�weak�—�with�47%�fewer�funds�raised�than�in�the�same�period�last�year.

London’s�Main�Market�and�AIM�slipped�from�fifth�position�in�2015�to�seventh�in�2016�amongst�the�world’s�most�active�exchanges�by capital raised and from eighth to ninth position in terms of deal volumes.

UK IPOs exhibit positive outperformance compared to broader equity indices. IPOs on the London Main Market are currently trading�on�average�at�19%�above�offer�price,�whilst�listings�on�AIM�are currently trading at 27% above price.


2016 Top market listings

Top 10 by Market Cap — Main market






Closing price (at year end)

% change in price

31–Oct–16 ConvaTec Group plc X UK UK Health Care Equipment & Services 4,390.0 1,484.4 225 224.5 232.2 103%

08–Feb–16 CYBG plc UK UK Banks 1,831.2 395.7 180 192 279.5 155%

10–Mar–16 Metro Bank plc UK UK Banks 1,525.0 400.0 2000 2150 3134 157%

17–Feb–16 Countryside Properties plc X UK UK Household Goods & Home Construction 1,058.6 349.3 225 235 244.8 109%

12–Feb–16 Ascential plc X UK UK Media 937.3 299.9 200 200 269.2 135%

10–Feb–16 CMC Markets plc UK UK Financial Services 722.7 217.5 240 240 114.5 48%

20–Oct–16 Biffa plc X UK UK Support Services 450.0 212.4 180 180 180.25 100%

18–Nov–16 Civitas Social Housing plc UK UK Real Estate Investment Trusts 361.8 350.0 100 103 103.37 103%

26–Apr–16 Forterra plc X UK UK Construction & Materials 286.1 128.4 180 175 178 99%

20–Oct–16 Luceco Ltd X UK UK Electronic & Electrical Equipment 209.0 93.1 130 150 189 145%

Top 10 by Market Cap — AIM







% change in price

23–Mar–16 Watkin�Jones�plc UK UK Household Goods & Home Construction 258.2 131.3 100.00 101.00 118 118%

10–May–16 Hotel Chocolat Group plc UK UK Food Producers 197.5 55.5 148.00 190.00 275 186%

06–Jun–16 Mereo Biopharma Group Limited UK UK Pharmaceuticals & Biotechnology 187.9 11.4 221.00 275 269.88 122%

26–Feb–16 Shield Therapeutics plc UK UK Pharmaceuticals & Biotechnology 177.9 32.5 150.00 157 173.00 115%

06–May–16 Midwich�Group�plc UK UK Support Services 170.8 75.2 208.00 235.00 230.50 111%

14–Jun–16 Time Out Group plc UK UK Media 165.7 90.0 150.00 140 138.00 92%

26–May–16 Joules Group plc X UK UK General Retailers 153.6 77.5 160.00 194 217 136%

15–Jun–16 Draper Esprit plc UK UK Financial Services 123.0 78.7 300.00 308 347.00 116%

05–May–16 Morses Club plc UK UK Financial Services 112.0 68.5 108.00 108.00 118.27 110%

18–Mar–16 Blue Prism Group plc UK UK Software�&�Computer�Services 74.7 21.1 78.00 111 427.00 547%

Top 10 by perfomance Main & AIM

Date of admission Company PE backed Country of incorporation

Region/s of domicile Sector Market cap. on admission (£mn)

Funds raised (£mn) Placing price (p)

Closing price (after first day of trading)


% change in price

18–Mar–16 Blue Prism Group plc AIM UK UK Software�&�Computer�Services 74.7 21.1 78.00 111 427.00 547%

05–Aug–16 Franchise Brands plc AIM UK UK General Retailers 28.0 3.5 33.00 42 66 200%

29–Mar–16 MaxCyte Inc AIM US US Pharmaceuticals & Biotechnology 10.0 10.0 70.00 76.50 137.50 196%

31–Oct–16 Golden Rock Global plc Main Market China China Nonequity Investment Instruments 4.6 1.6 15 17 28.5 190%

10–May–16 Hotel Chocolat Group plc AIM UK UK Food Producers 197.5 55.5 148.00 190.00 275 186%

18–Mar–16 Cerillion Technologies Ltd AIM UK UK Software�&�Computer�Services 25.2 10.0 76.00 80 137.5 181%

17–Mar–16 Yu Group plc AIM UK UK Gas,�Water�&�Multiutilities 28.3 10.0 185.00 198 320 173%

14–Nov–16 Angus Energy plc AIM UK UK Oil & Gas Producers 12.9 23.0 6.00 6 10 170%

29–Mar–16 Harwood�Wealth�Management�Group�plc AIM UK UK Financial Services 45.0 13.5 81.00 91 132.5 164%

27–May–16 Directa Plus plc AIM Italy Italy Chemicals 61.0 12.8 75.00 105.50 122 163%


Top 10 by Market Cap — Main market







% change in price

31–Oct–16 ConvaTec Group plc X UK UK Health Care Equipment & Services 4,390.0 1,484.4 225 224.5 232.2 103%

08–Feb–16 CYBG plc UK UK Banks 1,831.2 395.7 180 192 279.5 155%

10–Mar–16 Metro Bank plc UK UK Banks 1,525.0 400.0 2000 2150 3134 157%

17–Feb–16 Countryside Properties plc X UK UK Household Goods & Home Construction 1,058.6 349.3 225 235 244.8 109%

12–Feb–16 Ascential plc X UK UK Media 937.3 299.9 200 200 269.2 135%

10–Feb–16 CMC Markets plc UK UK Financial Services 722.7 217.5 240 240 114.5 48%

20–Oct–16 Biffa plc X UK UK Support Services 450.0 212.4 180 180 180.25 100%

18–Nov–16 Civitas Social Housing plc UK UK Real Estate Investment Trusts 361.8 350.0 100 103 103.37 103%

26–Apr–16 Forterra plc X UK UK Construction & Materials 286.1 128.4 180 175 178 99%

20–Oct–16 Luceco Ltd X UK UK Electronic & Electrical Equipment 209.0 93.1 130 150 189 145%

Top 10 by Market Cap — AIM







% change in price

23–Mar–16 Watkin�Jones�plc UK UK Household Goods & Home Construction 258.2 131.3 100.00 101.00 118 118%

10–May–16 Hotel Chocolat Group plc UK UK Food Producers 197.5 55.5 148.00 190.00 275 186%

06–Jun–16 Mereo Biopharma Group Limited UK UK Pharmaceuticals & Biotechnology 187.9 11.4 221.00 275 269.88 122%

26–Feb–16 Shield Therapeutics plc UK UK Pharmaceuticals & Biotechnology 177.9 32.5 150.00 157 173.00 115%

06–May–16 Midwich�Group�plc UK UK Support Services 170.8 75.2 208.00 235.00 230.50 111%

14–Jun–16 Time Out Group plc UK UK Media 165.7 90.0 150.00 140 138.00 92%

26–May–16 Joules Group plc X UK UK General Retailers 153.6 77.5 160.00 194 217 136%

15–Jun–16 Draper Esprit plc UK UK Financial Services 123.0 78.7 300.00 308 347.00 116%

05–May–16 Morses Club plc UK UK Financial Services 112.0 68.5 108.00 108.00 118.27 110%

18–Mar–16 Blue Prism Group plc UK UK Software�&�Computer�Services 74.7 21.1 78.00 111 427.00 547%

Top 10 by perfomance Main & AIM

Date of admission Company PE backed Country of incorporation

Region/s of domicile Sector Market cap. on admission (£mn)

Funds raised (£mn) Placing price (p)

Closing price (after first day of trading)


% change in price

18–Mar–16 Blue Prism Group plc AIM UK UK Software�&�Computer�Services 74.7 21.1 78.00 111 427.00 547%

05–Aug–16 Franchise Brands plc AIM UK UK General Retailers 28.0 3.5 33.00 42 66 200%

29–Mar–16 MaxCyte Inc AIM US US Pharmaceuticals & Biotechnology 10.0 10.0 70.00 76.50 137.50 196%

31–Oct–16 Golden Rock Global plc Main Market China China Nonequity Investment Instruments 4.6 1.6 15 17 28.5 190%

10–May–16 Hotel Chocolat Group plc AIM UK UK Food Producers 197.5 55.5 148.00 190.00 275 186%

18–Mar–16 Cerillion Technologies Ltd AIM UK UK Software�&�Computer�Services 25.2 10.0 76.00 80 137.5 181%

17–Mar–16 Yu Group plc AIM UK UK Gas,�Water�&�Multiutilities 28.3 10.0 185.00 198 320 173%

14–Nov–16 Angus Energy plc AIM UK UK Oil & Gas Producers 12.9 23.0 6.00 6 10 170%

29–Mar–16 Harwood�Wealth�Management�Group�plc AIM UK UK Financial Services 45.0 13.5 81.00 91 132.5 164%

27–May–16 Directa Plus plc AIM Italy Italy Chemicals 61.0 12.8 75.00 105.50 122 163%


To attract the investors required in the post-Brexit market environment,�many�IPOs�have�had�to�be�priced�toward�the�lower�end of their price range.

This�lower�pricing�has�led�to�a�number�of�potential�IPOs�being�withdrawn�from�the�market�in�the�fourth�quarter�and�has�been�a�significant�factor�in�the�lower�levels�of�IPO�activity�in�the�latter�part of 2016. Misys, PureGym, TI Automotive and Mountain Warehouse�were�amongst�the�higher�profile�withdrawals,�whilst�O2 has delayed its listing until the markets are more supportive.

Looking forward — 2017

“�Whilst�the�volume�of�IPOs�has�remained roughly stable compared to 2015,�we�saw�smaller�listings�coming�to�the�market�this�year�with�AIM�being�the most active market. This is mainly due to the number of private equity backed businesses coming to market being much smaller than usual largely due to currency instability.

Currency�fluctuations�have�meant�that�IPOs have continued to have to price themselves�at�the�lower�end�of�their�price range to attract the investors required.�This�low�price�point�has�led�to a number of potential IPOs being withdrawn�from�the�market�and�has�been the main cause of the lack of activity.

Looking�ahead�we�expect�a�slow�start�to 2017, but once the political dust sets�on�both�sides�of�the�Atlantic�we�are likely to see an uplift in activity in Q4 2017.”

Scott McCubbin EY IPO Leader UK&I

Many of the businesses that have put their listing plans on hold have not yet revised their�IPO�timetables.�In�part,�this�reflects�difficulties�in�agreeing�upon�valuations�amid�a�low�IPO�pricing�environment,�but�currency�fluctuations�have�also�added�to�the�difficulty�of�valuing�revenue�streams.�The�flipside�is�that�the�weaker�pound�will�make UK IPOs more attractive to overseas investors,�but�it�will�require�a�more�stable�market environment.

In�the�wake�of�political�events�in�both�the�UK�and�the�US,�investor�confidence�has�been�dented.�Low�pricing,�the�faltering�of�the�post-Brexit�equity�market�rally�and�ongoing�uncertainty�about�what�the�UK�economy�will�look�like�outside�the�EU�have�all�contributed�to�a�‘wait-and-see’�approach�amongst�many�IPO�candidates.

We�believe�a�significant�improvement�in�IPO�activity�is�unlikely�until�uncertainty dissipates once the Presidential transition has taken place in the US and the UK has formalised its EU exit strategy.


Globally2017 IPO outlook remains optimistic despite ongoing uncertainty in�a�period�of�transition.�Equity�markets�have�risen�to�new�highs�toward�the�end�of�this�year.�Volatility,�as�shown�by�measures�such as the CBOE Volatility Index (VIX®), EURO STOXX 50® Volatility, FTSE 100 Volatility Index and HSI Volatility Index, has fallen�and�trailing�P/E�ratios�are�trending�upward.�Despite�these�uncertainties, the prospects for IPO activity in 2017 look better than for 2016. In Greater China, currently the engine room of global IPO activity, the China Securities Regulatory Commission (CSRC) started to speed up the approval of IPOs in November 2016.�With�more�stable�equity�markets�in�Mainland�China,�we�expect�there�will�be�a�higher�number�of�IPOs�approved�in�2017�than�in�the�previous�year.�In�Hong�Kong,�we�anticipate�the�number�of�entrepreneurial�IPOs�will�be�stable,�but�that�average�deal�size�will�fall�as�there�are�currently�less�state-owned�enterprise�(SOE)�IPOs in the pipeline.

In Europe, the mix of supportive economic fundamentals�along�with�ongoing�political�uncertainty makes the outlook slightly more cautious,�but�we�expect�that,�at�a�minimum,�2017�IPO�activity�will�surpass�2016�levels

The�outlook�for�2017�IPO�activity�is�bright�in�the�US,�where�we�expect�a�rebound�from�what�has�been�the�slowest�year�for�IPOs�since�2009.�As�the�IPO�pipeline�continues�to�fill,�we�anticipate�that�deal�activity�in�2017�will�exceed�the�level�of�this�year.�Particularly�encouraging�is�the�news�that�one�of�the�largest�unicorns�has�filed�for�an�IPO�now�that�the�US�presidential�election�is�over.�A�deal�of�very�significant�size�could�provide�the�stimulus�the�market�needs,�re-igniting interest in IPOs.


For more information contact our international specialists or alternatively speak to your local EY adviser.

Scott McCubbinIPO Leader

Tel: + 44 20 7951 3519Email: [email protected]

Aoife WarrenDirector, Financial Position and Prospects

Tel: + 44 28 9044 3555Email:� [email protected]

Richard HardingPartner, UK North


Richard HallPartner, UK London


Dom McAraExecutive Director, UK Midlands


Chris LockePartner, EMEIA Financial Services


David BuckleyPartner, UK North


Nadeem KhanDirector, India


Steve CollinsDirector, Americas


Timothy PinkstoneDirector, Russia and CIS


Marcus BaileyExecutive Director, Middle East and Africa


Ian KellyDirector, Ireland


Cary WilsonPartner, Ireland

Tel: + 44 28 9044 3547Email:� [email protected]

Sean CallaghanPartner, Capital Markets


Neil GloverBusiness Development Director, UK London


Please�visit�www.ey.com/uk/IPO�for�more�information�on�how�we�can�help�you�or�your�business.

IPO specialist team


EY Global IPO Center of ExcellenceOur�Global�IPO�Center�of�Excellence�is�a�virtual�hub�which�provides�access�to�tools�and�knowledge�for�every�step�of�the�journey�from�finding�out�more�about�what�going�public�means�to considering capital raising options and addressing post-IPO risks.�It�provides�access�to�all�our�IPO�knowledge,�tools,�thought�leadership�and�contacts�from�around�the�world�in�one�easy-to-use source.

www.ey.com/ipocenter

IPO Retreat 24 and 25 April 2017Looking to float in the next 12–36 months?Our IPO Retreat helps CEOs and CFOs contemplating an IPO on one of the London markets.

It gives unparalleled advice from key advisors and guest speakers�who�have�been�through�the�process,�and�provides�invaluable�networking�opportunities.

The�IPO�Retreat�offers�an�invaluable�opportunity�to�find�out�whether�an�IPO�is�the�right�growth�option�for�your�business.

To�find�out�more,�contact: Eirini Vogiatzi, [email protected]

Relevant programmes


EY’s IPO services have helped more companies grow from private to public than any other organisation. ey.com/uk/ipo #BetterQuestions

How well rehearsed are you for the public stage?

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About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

About EY’s IPO services EY is a leader in helping to take companies public worldwide. With decades of experience, our global network is dedicated to serving market leaders and helping businesses evaluate the pros and cons of an IPO. We demystify the process by offering IPO readiness assessments, IPO preparation, project management and execution services, all of which help prepare you for life in the public spotlight. Our Global IPO Center of Excellence is a virtual hub which provides access to our IPO knowledge, tools, thought leadership and contacts from around the world in one easy-to-use source. www.ey.com/ipocenter

Ernst & Young LLPThe UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with registered number OC300001 and is a member firm of Ernst & Young Global Limited.

Ernst & Young LLP, 1 More London Place, London, SE1 2AF.

© 2017 Ernst & Young LLP. Published in the UK. All Rights Reserved.

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Information in this publication is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional advice. Ernst & Young LLP accepts no responsibility for any loss arising from any action taken or not taken by anyone using this material.

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