IPOs are back on the agenda

A surge in IPOs last year may be the first sign of a recovery in the UK float market. Europe’s IPO markets have also continued to gain momentum building on a successful twelve months.

 

London is still the most active exchange in Europe and during 2013 we saw the IPO market raise total proceeds in excess of those in 2012. Cancellations and postponements have fallen to lows not seen since 2007. These are both positive indicators which suggest a more energetic market and renewed investor enthusiasm going into 2014.

 

In the North East, the relative drought of floats on the London stock markets was broken with the admission of Utilitywise to AIM in 2012.  Prior to this the last IPO seen in the region was in 2007 when five companies were floated; three companies were admitted to AIM and two on the main market: Wellstream in April and Eaga two months later. Eaga was the last company in the region to successfully list on the main market of the London Stock Exchange.

 

Interestingly only two of these companies are still quoted but neither of them maintains their headquarters in the region. Both Eaga and Wellstream were delisted four years after flotation. In April 2011 Eaga was sold to Carillion for over £300million and two months later US company GE acquired Wellstream for £800m.

 

One North East business has successfully listed twice.  In 1999 AIM listed Comprehensive Business Services acquired Stockton-based Brulines by way of a reverse takeover. Three years later Brulines, which by then was the only trading subsidiary of Comprehensive Business Services, was acquired by a management buy–out (MBO).  A subsequent MBO in 2005 was followed by a new listing for Brulines on AIM in 2006 before a name change to Vianet in 2012.

 

Following the successful listing of Utilitywise in 2012, two North East companies were admitted to AIM in 2013.  Both Kromek, which listed in October, and Applied Graphene Materials have been spun out of Durham University.

 

The flotation of Sedgefield-based Kromek (originally Durham Scientific Crystals) raised £15 million and the offer was over-subscribed. Applied Graphene Materials raised £11 million on flotation and will use this to expand capacity at its Wilton site.  Both companies are high-tech manufacturers – one specialising in radiation technologies and the other producing graphene, the new ‘wonder carbon’, on a commercial scale.

 

Although private equity backed deals continue to drive IPO activity globally, we have yet to experience this to any great extent in the North East. Wellstream was the last exit of this type in the North East and prior to that PD Ports in 2004. 3i exited from three North East businesses by way of flotation in 2000, 2002 and 2004 with Bede Scientific, Parkdean and Immunodiagnostic Systems respectively.

 

The global markets continue to return to good health and in London the FTSE is performing well with average volatility levels settling to pre-crisis norms. This positive sentiment is the lifeblood of the IPO market and bodes well for 2014.

 

What are your thoughts on IPOs?Share your thoughts in the comments box below or if you're thinking of doing an IPO please contact us to set up a meeting to discuss your specific requirements confidentially here.