London stock market ready for strong IPO year

Gulf Today Report 

London set for a strong year for stock market flotations, said analysts, adding that the Brexit and coronavirus pandemic allows firms to enlarge.

Big-name businesses have announced plans for initial public offerings (IPOs) in recent weeks. 

According to specialists Brexit has acted as a catalyst for a lot of companies to raise funds. 

Confidence continues to build

At London-based financial services giant EY, Scott McCubbin said "looking to the year ahead, we can expect 2021 to be a very strong year for the UK IPO market." 

"An uptick in IPO activity may well intensify the competition for investment, placing greater emphasis on preparing early for IPO and raising profile with investors,” McCubbin added. 

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In recent years, the IPO market has drawn interest due to the easier availability of financing, alongside ultra-low interest rates. 

Ideal for IPOs

Marcus Stuttard, head of UK primary markets at the London Stock Exchange said "over the past few years we have also seen a strengthening in the financing available for UK and European companies in the early stages of their growth." 

That translates into a growing number of dynamic businesses that are ideal for an IPO. 

These factors are aiding the strong IPO pipeline showing out at the beginning of 2021, he added. 

Also, investors have lots of cash due to low borrowing costs and billion worth of stimulus funds. 

London thus hopes to steal a march on rival IPO destinations such as Frankfurt, Hong Kong and New York.

Britain ranked below China and the United States based on amount of cash raised on the stock market, however, London represented more than 40 per cent of the total IPO amounts raised in Europe. 

Brexit could deliver a further boost because the government wants to relax certain stock exchange regulations as it seeks to attract more big-name businesses to list.