The clouds seem to be gathering for the UK investors ahead of the Brexit deal even as the island nation recorded its slowest quarter for IPO activities in a decade. According to a recent IPO report by EY, only 4 companies listed between July and September this year.
PWC had also reported earlier this year that the uncertainty of the Brexit would slow the market at its best. According to the report, Q1 of this year was the lowest for the London Stock Exchange in 15 quarters, even as the wait-and-see attitude continues to take over the market.
But the situation continued to worsen as the year rolled out. For the past three quarters of this year, a total of 24 companies went public, raising about £4.8 billion. This represents a 55% drop from the companies that went public last year (54 in total) and a drop from the £5.2 billion that was raised during the same period in 2018.
Since the launch of the London Stock Exchange in 1995, the regulator has grown to become the most successful growth market globally. The platform boasts of more than 3,600 listings drawn from all parts of the world. Nonetheless, the market has been experiencing sharp drops in the number of IPO listings year-on-year as the Main Market registered a drop of slightly more than a third. Analysts believe the pending divorce between Britain and the EU is the biggest contributor to the dwindling confidence in the British market.
“Although quarter three is typically quieter for listings, the subdued markets were particularly telling. To see such low levels of IPO activity we must rewind back ten-years to Q3 2009, when the UK was just starting to pull out of recession,” Earnest Young’s UK IPO Leader Scott McCubbin said adding, “The uplift in momentum in quarter two this year looks to have been at the cost of Q3 as issuers drew their plans forward to take advantage of the IPO window, created by the extension of the Brexit deadline. Equally, it is likely that companies have postponed their IPOs for more settled times in Q4 or even further ahead to 2020.”
However, McCubbin believes that this shouldn’t be alarming just yet. He confirmed that a decent number of companies “have signalled their intentions to list later in the year.”