Despite the market uncertainty seen globally at the turn of the year, companies are still choosing to use the public markets to access capital to fund growth.
A strong IPO rally in the second quarter contributed to an overall 35 per cent increase in IPO capital raised through London Stock Exchange in the first half of 2019, compared to the same period last year. Over £19bn of equity capital was raised in H1 – almost three times more capital than on the next largest European exchange.
Notably, capital raised in London by cross border IPOs and new listings accounted for 47 per cent of the total raised. This is testament to the continued international confidence in UK markets and reinforces the UK’s status as a global financial centre. Domestically, this also means that UK companies continue to have access to one of the deepest pools of long-term international investor capital. UK pension funds and individual investors also benefit as it allows them to tap into global growth opportunities.
Home-grown businesses have also sought to fund their growth by raising equity capital on the public markets. Among the many UK companies to have listed on London Stock Exchange over the last 18 months, Trainline’s £1.1bn float in June stands out as the largest.
Indeed, access to growth finance and increased brand awareness are two of the most commonly stated reasons behind a company’s decision to pursue a public listing.
Yorkshire-based companies have been no exception in these ambitions. For example, professional services consultancy, Begbies Traynor, which has several offices across Yorkshire and Humber, raised £8.3m on AIM on Friday, helping fund future acquisitions. Several Yorkshire businesses have recently chosen to float in London, including Wakefield-based video game developer Team17 Group, and Huddersfield’s regulatory and business support services provider SimplyBiz Group.
Both of these dynamic firms joined AIM, the world’s largest growth market, last year. They are among the top ten largest AIM IPOs in the last 18 months. SimplyBiz Group has also taken advantage of its listed status by raising a further £29.1m to support its acquisition of fintech and research firm Defaqto.
In 2019, AIM has continued to drive growth market capital in Europe, accounting for 65 per cent of all IPO and follow-on capital raised. Combined this equates to £2.4bn raised on AIM in H1.
The follow-on capital raised by SimplyBiz Group and Begbies Traynor demonstrates that it’s not just new issuers that are attracted to the opportunities of accessing finance through London Stock Exchange. One of the key benefits of a public listing is a company’s ability to return to the market to raise further capital to fund future develop-ment. The impact of growth companies on the UK economy was recently reinforced in London Stock Exchange Group’s 1000 Companies to Inspire Britain 2019 report, featuring the UK’s fastest growing SMEs.
Featured companies from Yorkshire include JAY-BE; one of the UK’s most distributed bed brands; OE Electrics Group, which designs and manufactures electrical power, USB charging and data connectivity solutions; and Benchmark Holdings, which has now featured in the 1000 Companies to Inspire Britain report for the fifth consecutive year.
The breadth and depth of London Stock Exchange’s markets and the long-term international investor base is clear to see. As is the market’s resilience, even in uncertain times. It enables companies of all sizes to fund their growth, acquisitions, and research & development.
Bod Buckby is Head of UK Primary Markets – North, London Stock Exchange