The UK IPO market recorded just one new listing in Q4 2023*, says UHY Hacker Young, the national accounting firm.
The last time a quarter saw just a single IPO in London was the first three months of 2009, in the midst of the great financial crisis. The total number of IPOs for 2023 fell to just 24, a 47% decrease on the 45 IPOs recorded in 2022 and the lowest number since the London Stock Exchange began publishing records in 1995.
James Astley, Partner at UHY Hacker Young, explains that the single new listing on the London Stock Exchange in the final three months of the year was not a full IPO, with English wine maker Chapel Down transferring its listing from the Aquis Exchange to AIM without raising new capital.
However, there are signs suggesting an upturn in UK IPOs could be on the horizon. The UK economy has seen a sharp drop in inflation, from 6.7% in September to 3.9% in November**, raising prospects for a cut in interest rates and a return for IPOs in 2024.
The IPO drought in some other markets has been less pronounced, giving further hope of a UK recovery in 2024. US IPOs in Q4 reached 33, an 83% increase on the 18 IPOs recorded in Q4 of 2022***. This came as US inflation subsided earlier than in the UK.
A further potential boost for UK IPOs came in December with the FCA’s proposed streamlining of London’s listing regime that is aimed at making a listing in the UK more attractive to companies.
The proposals would remove the requirement for shareholders to approve transactions such as M&A deals and would create a new category of secondary listing for companies that already have a main listing elsewhere.
James Astley, Partner at UHY Hacker Young says, “2023 has been a very tough year for UK IPOs. The last three months saw the market for floats bottom out but there are certainly reasons for optimism in 2024.”
“As seen in the US, companies will start to bring back IPO plans relatively quickly once they believe interest rate cuts are a realistic possibility. With some economists already predicting UK interest rate cuts as early as February 2024****, IPOs could come back earlier than some expect.”
“It’s also heartening to see Chapel Down ‘graduating’ from Aquis to the AIM market. As AIM has gradually grown its regulatory and compliance structures, Aquis has served an increasingly important role for smaller, younger companies looking to raise capital.”
There is currently one IPO slated to take place in London in January 2024, with food tech business MicroSalt having twice delayed its AIM listing in late 2023.
* Year-end December 31.
** Source: ONS
*** Source: NYSE
**** Goldman Sachs