Market Performance and Fundraises
In what was always going to be a difficult period for UK markets, against a backdrop of both geopolitical and domestic uncertainty, performance for H119 was hampered by the continued lack of certainty over the political outlook for the UK. UK fundraising remained at comparably lower levels than European markets.
Despite this, there were two ‘mega deals’ (>£1bn) in the period suggesting that, for the right proposition, the main market remained an attractive destination for companies. However, it was telling that both transactions were by multinational businesses, with revenues primarily generated overseas. Astra Zeneca, with the majority of its income in USD, raised £2.7bn through a further issue to fund its pipeline, while Huatai Securities, a Chinese bank, raised £1.3bn on admission to the Main Market.
Fundraising was distorted by these two major transactions. Investors and sponsors have otherwise been increasingly selective on investment opportunities brought to market. The first half of the year is typically a lower period for new issues; however, H119 was the worst H1 for IPOs since H116 with only 14 transactions raising capital and average funds raised of £44m (adjusted for the Huatai fundraise).
Average further issue fundraises were £25.3m. Excluding the impact of Astra Zeneca’s £2.7bn raise, average funds were in line with H218 (£17.7m); and significantly below 2017 levels.
The largest sectors by activity were pharmaceuticals and financial services. Other further issues were primarily in the real estate sector, with a number of REITS (with relatively stable, diversified real estate offerings) also bucking the trend including LXI REIT and Impact Healthcare REIT.