Esure confirmed on September 13 that it would demerge GoCompare.com through a separate London listing following a strategic review. While not technically an IPO, the deal – which Deutsche Bank is advising – comes amid increasing activity in a market that has suffered on the back of Brexit.
In the year to September 13, $ 2.2 billion had been raised through IPOs on London’s main market, according to data provider Dealogic, compared with $ 8.6 billion this time a year ago.
But there are a number of companies slated for a listing in the coming weeks.
Hollywood Bowl, the UK’s largest 10-pin bowling operator, is aiming to float in London by the end of September, one person familiar with the group’s plans said. The private equity-backed group had originally planned to list in July, having announced its IPO plans days before the UK referendum.
Private equity firms are driving the current pipeline, with others tipped to list in the coming months including software maker Misys, owned by private equity firm Vista, and medical device manufacturer ConvaTec, which Nordic Capital and Avista Capital own.
James Fleming, co-head of equity capital markets for Europe, the Middle East and Africa at Bank of America Merrill Lynch, one of the banks advising Misys and ConvaTec, said: “We are looking at a potentially great IPO window right now. It’s the first IPO window post EU Referendum for [private equity] to exploit and market liquidity is strong”.
His banking peers were equally optimistic. Gareth McCartney, head of ECM syndicate at UBS for Emea, said that “anyone who was swithering between listing now and early in 2017 will reconsider options” as there is a clear window before the next event risk – the US elections.
Edward Bibko, the head of Baker & McKenzie’s capital markets group in Emea, noted last week that it was “hard to get the attention of bankers these days as everyone seems off-their-feet busy”.
Investors have also seen a recovery in activity.
Jamie Carter, a fund manager at SW Mitchell Capital who invests in European smal-cap stocks, said prospects for all sorts of IPOs were piling up on his desk.
Meanwhile, Dan Nickols, head of UK mid and small-cap at Old Mutual Asset Management, which invests in equities, said there was a “surprisingly strong amount of activity” with IPOs in the pipeline crossing sectors such as leisure, health and financial services.
But some are more cautious about the revival. Carter said: “I am rather sceptic of this mad flurry. There are a lot of companies that are coming to the market too early.”
Acknowledging that investment bankers might be busy working on deals given the relative weakness of the sterling post-Brexit, Chi Chan, lead portfolio manager on Hermes Investment Management’s eurozone equity strategy, said: “I have hardly seen any IPO prospectuses hit my desk.”
He added: “I would not anticipate a pick up and even if there was it would only be a move from very, very quiet to relatively quiet.”
Others think any burst of activity could be short-lived. Daniel Zilberman, the head of Europe at Warburg Pincus, said the “the full impact of Brexit will not be felt for a while” although 2017 budgets will likely be tighter due to macroeconomic uncertainty.
Clarification: This article has been updated to clarify that Gareth McCartney and James Fleming cover the Emea region at their respective firms.
Additional reporting by Yolanda Bobeldijk, Stefanie Eschenbacher and Andy Pearce