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May 30, 2017

Positive first quarter for IPOs on the London Stock Exchange

The first quarter of 2017 has seen a positive upward trend in IPO (Initial Public Offering) activity on the London Stock Exchange (LSE).

The political uncertainty in the UK over the past 12 months led many to forecast a stark and uncertain economic future for the UK economy, but so far the position looks optimistic.

Globally, the first quarter of the year has seen the highest number of Initial Public Offerings (IPO) since 2007. In the UK, it is estimated that London has raised over 1.1 billion dollars in public offerings on the LSE AIM and main market.

In the first four months of the year, the LSE listed 12 IPOs which makes up 3.3 % of all IPO listings globally.

Of those 12 IPO listings, 3 were cross-border IPOs from the US and Italy.  Global stock market figures report that the LSE listed 54 IPOs throughout 2016, representing 4.9% of all IPOs listed.  These figures seem to show that 2017 may well be an encouraging year for London.

Ernst and Young do, however, report that this is not entirely unexpected; a weak pound, for example, has attracted further investment in UK stock from foreign investors. The Government’s decision to trigger Article 50 has also given businesses a two-year deadline in which they can take advantage of greater access to European investors and the European passporting regulations.

It is also reported that Kuwait Energy plc, the independent oil and gas company based in the Middle East, is looking to a one billion dollar public offering on the LSE. Further reassuring news for the market comes from that of the multinational professional services firm TMF, which has announced it is planning a one billion pound float on the LSE in 2017 with a potential IPO listing in the pipeline for the summer.

Whilst the majority of the reports for the first quarter appear to be optimistic, the political upheaval in the UK post-Brexit and the imminent General Election encouraged some companies err on the side of caution.

Financial software company Misys for example has reportedly pulled out of a planned float which was intended to take place at the end of 2017. The same has also been reported for the multinational investment company Brait.

Both companies have reportedly cited the potential volatility caused by the UK’s decision to leave the European Union as the reason for delaying their plans, to float on the LSE, for the time being at least.

For the most part, IPO activity for the first quarter of 2017 has been positive and it looks likely that we are set to see a good year of listings in the UK. Whether this will continue beyond 2018 after the Brexit negotiations are in full play, remains to be seen.

However, for the time being at least, the downturn in the sterling appears to be working in our favour and the two-year process of negotiating a trade deal with Europe also gives ample time for further investment and listings on the LSE.

The article was first published on Business News Wales on the 30th May 2017

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