Initial public offerings on the London Stock Exchange plunged 90% in 2022 compared to the previous year, according to IPO Eye, a market tracker produced by EY.
In the first half of this year, IPO activity in the UK represented only slightly more than 11% of all IPOs in Europe, and London IPOs have fallen to their lowest levels since the great recession.
Overall, the value of IPOs in the capital slumped more sharply than the global average, with IPO proceeds around the world tumbling 61% across the year.
The UK has begun tweaking its listing rules to stem the decline, but parity with the US will require that the UK and Europe accelerate incubation of high-growth companies, like technology and biotechnology start-ups.
The last three months saw London’s main market produce just nine IPOs raising a total of £380m, down from 17 IPOs raising £1.9bn in 2021.
“2022 was a very difficult year for the UK IPO market, with the adverse macroeconomic and geopolitical environment leading to a relative pause in IPO activity towards the end of the year,” said Scott McCubbin, EY UKI IPO Leader.
McCubbin also warned the coming year looks “uncertain” with the “continuation of prevailing headwinds” such as inflation, interest rates, energy prices and supply chain issues.
He added, “However, there remains pent-up demand for IPOs, so we may see an upturn in the market in the second half of the year if we avoid further geopolitical shocks,” he added.
UK&I Private Leader, Ernst & Young LLP.
Debbie O’Hanlon, EY UKI private leader, said, “As the pipeline continues to build, many companies are waiting for the right time to revive their IPO plans. However, with tightening market liquidity, investors are more risk averse and are looking to invest in companies that can demonstrate resilient business models in profitability and cash flows, while also articulating their ESG agendas.”
Last year, market participants raised concerns that delistings and sluggish IPO activity was causing the LSE to shrink at a faster rate than its peers.
