The majority of IPOs that have come to market since the end of 2009 are now underperforming the FTSE 100 since issue, according to the latest Deloitte IPO barometer. The last six months have been particularly difficult for IPOs and this latest analysis is in stark contrast to the November 2010 barometer, when six out of nine listings were overwhelmingly outperforming the FTSE.
Individual company performance has been mixed. Since the IPO market reopened at the end of 2009, there have been 12 IPOs of established trading companies raising over £50m, through to the end of May this year. Deloitte’s analysis shows that of these, six are currently trading below their issue price and eight have underperformed the relative movement in the FTSE.
John Hammond, capital markets partner at Deloitte, comments: “It is unsurprising that recent market volatility has had an adverse effect on IPOs. These IPOs are smaller than many of the FTSE jumbos and against this turbulent headwind are more likely to be buffeted around.
“In real terms, an investment of £1,000 in each IPO since January 2010 would have made a return of £37 today versus £64 invested in the FTSE 100. That is quite a turnaround from six months ago when the equivalent returns were £259 and £31 respectively.
“Despite this mixed performance there is no shortage of companies seeking to come to market in the next 18 months but size and pricing are key.”