Mike Timmins, EY’s IPO leader in Scotland

Following a quiet second quarter when IPO activity was almost extinguished, the Main Market has witnessed its largest IPO for three years which was also the largest ever technology IPO by market capitalisation with The Hut Group raising £1.8 billion. While the London Shanghai Stock Connect program had its second listing of the year with China Yangtze Power Co Ltd, raising £1.4bn.

AIM has also had a good start to its 26th year of operation with three admissions in the quarter raising a combined total of £76m. We can already see this continue into Q4 as Calnex Solutions commenced trading on AIM this week, Scotland’s first IPO for two years.

Despite the transaction numbers remaining low, London has maintained its position behind US and China for funds raised both in the quarter and in the year to date, according to preliminary global data. In addition, and in a continuation of market activity pre-summer, more than £5bn has been raised in follow-on offers this quarter and while this is lower than the flurry of activity we saw pre-summer we expect further fundraisings to come to the market as the true impact of the pandemic continues to filter though into the final quarter of the year.

Mike Timmins, EY’s IPO leader in Scotland, said: “It is encouraging to see IPO market activity restart with the largest IPO in more than three years coming to market in Q3 2020. This not only signals an increase in appetite for companies to list, but a successful adoption of virtual IPO marketing in place of the traditional face-to-face meetings. This may evolve into more of a hybrid model in the future to incorporate a blend of both in-person and virtual methods. We’ve also seen the UK demonstrate the depth of market available to existing issuers with extensive fundraising activity continuing with more than 125 follow-on transactions pricing in the quarter raising some £5bn.”

Preliminary findings from the EY quarterly report, Global IPO trends: Q3 2020 suggest a significant increase in both the number of IPOs and proceeds worldwide due to a surge in activity in August and September.

The global report, to be published on October 15, is expected to show an increase in IPOs and proceeds in the Asia-Pacific and the Americas while EMEIA is on track to record a decrease in both.

Helen Pratten, EY partner, strategy and transactions, concluded: “If we have learned anything from 2020, it is to take nothing for granted and while we expect the IPO market to remain buoyant and deal pipelines are strong, there are potential challenges ahead with the US election and UK / EU relations still being negotiated so issuers need to be ready to take the opportunity of a market window.”