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What to expect from the UK IPO cycle in 2022


Some interesting intelligence in today from our friends at Avenir Registrars. Their barometer of ‘intention to float’ can provide investors with a good indicator of the overall health of the IPO market in the UK at the moment.

Despite the way the markets have opened this year, Avenir reckons that there is still a lot of uninvested cash looking for a home, and that 2021, while an excellent year for IPOs, should not be seen as unique. There is every reason to believe we could see more of the same this year.

Avenir’s numbers for January – it updates its barometer on the first of the month – indicate that there are six companies that have issued RNS notices with their plans list. The chart below illustrates the number of IPOs every month for 2021, plus the figure for January 2022.

IPOs 2021

“While one data point is far from conclusive, the fact we have seen as many IPOs called in January as we did in the same month last year certainly does offer some cause for cheer,” Avenir said. “There can be no guarantee that all six of these come to fruition, but the fact that companies are continuing to engage with professional advisers and push forward listing plans suggests that those who expressed concerns that IPO activity would now fall off a cliff may have been overly pessimistic.”

Last year the small caps market was looking in particularly rude health. The AIM market grew by 33 companies, which was its biggest increase since 2007. According to accounting firm UHY Hacker Young, a total of 66 companies floated on AIM, it best year since 2014. This despite a raging pandemic. It seems quite an achievement for the exchange. This included some very hefty listings, like the GBP 350m Life Science REIT or Revolution Beauty Group, which managed to raise GBP 300m.

According to Daniel Hutson, a partner with UHY Hacker Young in London, “2021 marks the first time the market has experienced a net growth since before the 2008 financial crisis. Last year also saw the biggest increase in the number of companies on the market since before the credit crunch, with over £3bn raised in IPOs and follow-on capital.”

While the main market has been criticised for a relatively low contingent of technology and other high growth companies, AIM has been a launchpad many of the UK’s most exciting and entrepreneurial tech businesses. This includes fashion brand BooHoo and AI software company Blue Prism.

“AIM is a launchpad for dynamic businesses, notably in the tech and pharmaceutical sectors and is leading the charge to bring younger and more exciting companies to the forefront,” Hutson added. “With the darkest days of the pandemic hopefully behind us, 2022 should be another exciting year for AIM, and UK business more broadly. AIM is the ideal market for dynamic, high growth companies who can quickly tap into sectors and market trends.”

This new data indicates that AIM may be on its way to halt the historic shrinkage the market has experienced in recent years. Research from UHY Hacker Young shows just 39 companies leaving the junior market in 2021, compared to 63 the year before. Only four companies left the junior market last year due to financial struggles or liquidation, and six were transferred to other markets, including the main market.

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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