Main Market Insights
Our Capital Markets team have produced a six monthly survey analysing the equity activity on the Main Market of the London Stock Exchange. The report considers the performance of the Main Market and its listed companies.
After 2017 ended with UK and US indices at record highs, 2018 ultimately closed with the largest annual fall in a decade. And it was a turbulent ride along the way.
Much has been made of the recent volatility of the markets, and indeed Sterling, but its impact on transaction activity has been equally intriguing.
The uncertainty appeared to turn investors away from IPOs and towards the relative safety of secondaries; assets they know, with a clear, liquid market value. Total funds raised on new issues were down to their lowest level since 2016, whereas funds raised on further issues were up to their highest level since 2015.
Deal timing was also key as companies, sponsors and investors navigated the market shocks. Summer was extremely busy, and corporates clearly saw October’s EU summit as a backstop to complete deals, the month alone seeing over 100 transactions, followed by a quiet November and December.
As we head into 2019, it is clear that the market craves certainty; Q1 may therefore be relatively quiet. The relative lack of IPOs in 2018 no doubt leaves a number of companies looking to reignite their IPO plans and/or raise funds once political and economics conditions settle, and (hopefully) markets recover.
Assuming a favourable consensus is reached on Brexit, the added certainty would point to a more active second half of the year for new issues, with secondaries ramping up as early as Q2. Companies would be well advised to consider their IPO readiness ahead of this. All eyes will no doubt be on European politics in the meantime...