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Summary
- Since the financial crisis of 2007-08, the first quarter of 2021, LSE has witnessed its best in terms of IPO.
- Cybersecurity firm, Darktrace is expected to go public in the near term.
- Fintech Firm Pensionbee, eyes a market cap of over £350 billion in its public listing.
IPOs have been raining in UK this year after witnessing an extremely dry spell of IPOs during 2020. The London’s stock market has managed to raise over £5 billion since January so far, according to a leading financial services firm, EY. Notably, there were just five IPOs in 2020 that could muster a total of only £615 million.
The UK witnessed the strongest opening quarter for IPOs since 2007 as more than 10 IPOs managed to raise over £5 billion on the main market since the beginning of 2021. Also, 8 firms managed to raise £441 million on the AIM segment during the first quarter of 2021.
The market seems to have weathered the uncertainties with respect to Brexit and Covid-19 pandemic (due to the rollout of vaccines). Also, the Chancellor of the Exchequer, Rishi Sunak, has eased the listing requirements to attract more technology floats in the city. Eased listing rules helped the technology firm, Deliveroo (LON:DRO), which was valued at over US $7 billion made it to the London stock market.
Also read: Deliveroo And Other IPOs Lined Up for LSE Debut
A host of big businesses are expected to go public this year. Big businesses are seeking fundraising for capacity expansion due to the availability of cheap credit and eased listing rules. The capacity expansion would also help in contributing to the domestic economy. The strength in the UK IPO market is evident from raining IPOs during the first quarter of 2021.
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Upcoming IPOs
Cybersecurity company Darktrace having attained a valuation of £3.8 billion, is expected to make its debut on the London stock market. AI (Artificial intelligence) experts, cyber specialists from GCHQ along with mathematicians from the University of Cambridge founded Darktrace in 2013. The company enables businesses to stay ahead of hackers and viruses by offering digital security solutions. Darktrace has a wide client base of over 4,700, including Drax power plant, Rolls-Royce, and the NHS.
As remote working culture flourished during the unprecedented crisis, the demand for Darktrace products surged in 2020 as the businesses struggled to keep up with network security risks after the remote working boom. Notably, Darktrace offered security solutions to the NHS free of charge last year. With remote working and e-commerce culture reshaping the world, the demand for Darktrace’s services is expected to surge in order to fix cybersecurity issues.
According to Darktrace, the cybersecurity market is worth around £29 billion. Darktrace revenues surged by over 150 per cent to $199 million in 2020 from $79 million in 2018. During two-year period ended 2020, the company witnessed a turnaround to $9 million of adjusted earnings from a $27 million loss. The company’s profitability was helped by travel bans induced by the coronavirus crisis. Darktrace is expected to float 35 per cent of its shares in phases to the market this year. The fund’s proceeds shall be deployed in improving cash flows, reducing debts and scaling up production.
Another IPO is expected from the realm of fintech space. The Fintech company specialising in pension management, Pensionbee aims to go public and is eyeing a market capitalisation of over £380 million. The company is expected to float 35.5 million new shares in the London stock market and raise £55 million approximately. Notably, the promoter holding in the company is around 60 per cent while the US bank, State Street, is the largest external shareholder in the fintech company. Moreover, Pensionbee has received interests from around 12,000 customers. Pensionbee’s revenue was up by 77 per cent year on year to £6.3 million in 2020.
It’s not only the London Stock Exchange but global exchanges as well, where there is the influx of public offerings by major names, the latest being Singapore-headquartered, “super app” Grab, which is going public in US in a record deal with a so-called Spac investment company, valuing the food delivery to online banking company at around $40 billion.
With the economy recovering steadily on the backdrop of expedited mass inoculation programme, the businesses are eyeing expansion. Moreover, with near zero interest rates regime, eased listing rules, and SPACs regaining popularity; a substantial number of businesses are expected to tap on this opportunity and get access to the world’s leading stock market.
