Eurozone crisis and IPO flops dent main market flotations

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THE eurozone crisis and stock market debutante flops took their toll on new listings on the main market of the London Stock Exchange, which saw just one initial public offering (IPO) during the second quarter.

By the halfway point of this year there had been just three main market listings, according to accountancy group Ernst & Young.

The Alternative Investment Market (AIM) fared better, with 11 listings during the quarter, although total volumes and funds raised for the first six months of the year were weak in comparison with last year.

David Buckley, Ernst & Young’s Yorkshire IPO leader, said: “Macroeconomic uncertainty returned in the second quarter, with a reignition of the eurozone crisis and poor post-IPO performance of some high-profile listings demotivating investors and budding IPO candidates.

“Nevertheless, the London AIM market proved to be resilient and experienced a strong and diversified number of IPOs.”

So far in 2012, there have been just 19 IPOs, with three on the main market and 16 on AIM. That compared to 43 over the same period in 2011.

The total value of funds raised was just £419m versus £8.7bn for the first six months of 2011.

Sheffield technology company WANdisco was one of the AIM flotations, joining the junior market last month. There were four UK-domiciled companies, of which two were technology firms.

Another eight companies raising funds during the quarter were domiciled outside the UK, with entrants from China, the United Arab Emirates, Canada, Austria, Singapore and the United States. Despite economic turmoil, E&Y said the pipeline of IPOs is building as companies continue roadshows to secure investor backing.

Mr Buckley said: “In this economic environment, where we’ve seen so many volatile market events having sudden impacts on market sentiment, budding IPO companies have to play a patient game, and be ready to list once the opportunity presents itself.”

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