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 the first half - 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
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 2019 stands out as the largest. The listing will help fuel the growth of the train booking app as well raising its public profile. 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 the first half.
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 development. In 2018, 70 per cent of capital raised on AIM was from companies choosing to raise new capital.
Showcasing the diversity of AIM, companies from the technology, finance and healthcare sectors have been among the more active follow-on issuers over the last 18 months. This includes companies such as automation firm Blue Prism Group, which has issued further capital in 2018 and 2019 to expand the Group’s activities globally and for research & development. Since listing in 2016, the company has seen its market cap grow over 2000 per cent from £48.5m to almost £1.1bn.
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 most dynamic and fastest growing SMEs. Features 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.
Companies in this year’s report created almost 96,000 jobs over a two-year period, a 39 per cent increase compared to companies featured in the 2018 report. The companies featured this year have also recorded an outstanding annual average revenue growth rate of 108 per cent - cementing their position as inspirational and rapidly growing businesses.
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, sector and geographic location to fund their growth, acquisitions, and research & development.
We remain firmly committed to promoting a financial ecosystem that helps businesses raise capital, create jobs and drive economic prosperity.