Large IPO’s expected to return

rolet_2243816bThe turbulent and uncertain last few months has led many companies that planned IPO’s this year choosing to either place them on hold or push them back. The below article from the telegraph leads us to believe that many of them are planning to return in the coming months, leading to many more large IPO’s.


The London Stock Exchange expects more companies to revive their plans to float in the coming weeks, following a strong six months for the market operator that delivered a 15pc rise in revenues.

Xavier Rolet, the chief executive of the LSE, said: “The combination of the Scottish referendum and the market wobble a few weeks ago added a note of uncertainty that created for a number of issuers a valuation issue and made them postpone the deals.

“But as we have seen, Virgin Money is back and the pipeline remains very strong and I believe between now and the end of the year, early next year, we will see some of the larger cap firms coming back to the market.”

He added that the junior market Aim had continued to launch several IPOs a week during the year, which he hailed as “part of the tech revolution that’s happening in the UK” as high-growth start-ups access the market.

Companies that have recently withdrawn their float plans during the market turbulence include the challenger bank Aldermore, which postponed its IPO in October; Edinburgh-based housebuilder Miller Group; and BCA, the company behind We Buy Any Car.

Many firms that took part in the wave of stock market debuts earlier in the year have been left trading below their IPO price, including AO World, Pets at Home and Saga.

The LSE said capital markets revenue rose 13pc to £164.6m in the six months to the end of September, with increasing activity on the primary markets, where the number of new issues rose from 79 to 126 over the half-year, and the secondary markets.

Companies raised £27.5bn on the LSE’s markets in London and Italy in the period, up 83pc on the same time last year.

The firm’s total revenues rose 15pc to £592.6m, while operating profits rose 10pc to £172.3m.

The £1.6bn acquisition of Frank Russell, which is expected to complete by the end of the year, brings with it the biggest benchmark provider in the US and an investment management business, which the LSE is reviewing. Russell’s indices business will be integrated with FTSE.

About a third of the LSE’s revenues will come from the US once the takeover of Frank Russell completes, and Mr Rolet said the firm has its sights on more bond trading and building on its position in interest rate swaps.

LCH.Clearnet, the clearing house that the LSE bought in 2012, posted a 30pc rise in revenues at constant currency to £165.7m. Future revenues will take a hit from the end of the commodities clearing contract with the London Metals Exchange in September, though higher tariffs on fixed income trading are expected to cushion the blow.

“The LSE has transitioned from being a potential victim of consolidation to being a consolidator in its own right. Management is taking very important steps to diversify the business and, thus, de-risking it,” said Owen Jones, an analyst at Espirito Santo.

The firm plans to pay an interim dividend of 9.7p per share, a rise of 4.3pc on last year when adjusted for a rights issue earlier this year that was used to fund the Russell deal.

Original Article by The Telegraph