Momentum gathers for capital raising in London, retaining its title as the leading financial capital in Europe
Group Director of Capital Markets, LSEG
London has retained its position as the premier venue for capital raising in Europe – with companies raising £16.3bn through IPOs and follow-ons during Q1 2021, amounting to double the value of the next two largest exchanges on the continent (Dealogic, April 2021). The latest Global Finance Centres Index, which assesses against factors such as business environment, human capital, infrastructure, taxation reputation, and financial sector development, has recognised London as Europe’s major global finance centre, positioned second globally after New York.
In what has been the most active start for capital raising in London for more than a decade, several key themes emerge: gathering momentum for IPOs, notably in the tech and consumer sectors; the continuing high level of international issuer interest in the London markets; and the drive towards a low-carbon economy by investors and corporates.
Despite market challenges of the twin headwinds of COVID-19 and the UK’s departure from the EU, the momentum behind London has continued to grow.
The surge in IPOs
In the first quarter, there have been 25 IPOs in London, raising an aggregate £7.2bn. In terms of the amounts of IPO capital raised, London continues to stand tall as one of the world’s top four venues.
High-growth tech and consumer internet companies accounted for 40% of the capital raised on London’s markets in 2020. That momentum has gathered speed in Q1 2021 with 10 IPOs raising £3.2bn. They include Danish online review platform Trustpilot (£1bn market cap) and Deliveroo, the largest admission on the Main Market since 2013.
Consumer and technology sectors have also been particularly active, including the IPOs of iconic footwear company Dr Martens (£1.48bn capital raised), online auction firm ATG (£300m capital raised), international gifting platform Moonpig Group (£540m capital raised) and ecommerce fashion brand In the Style (£60m capital raised).
A centre for international businesses to expand
London stands out as the world’s leading exchange for international companies. In 2020, 25% of the world’s cross-border IPO capital was raised in London – and the appetite for international companies to tap into London’s depth of investor base has remained strong in 2021.
The new listings exemplify London’s global appeal – for issuers from Europe, Asia-Pacific and North America.
tinyBuild, a Seattle-headquartered videogame publisher, raised £154m when it floated on AIM and provided another example of the appeal of London for growing US companies. "We were delighted by the level of investor appetite we have experienced during the IPO process and we welcome our new shareholders to tinyBuild," said its founder and CEO Alex Nichiporchik. “We believe that AIM provides the ideal platform for our growth, whilst helping to increase tinyBuild's profile even further.”
Russian value retailer Fix Price has been the largest Russian IPO in London for nine years, raising £1.25bn in an IPO that attracted strong investor demand. This latest transaction reflects London’s position as the largest listing and trading venue for Russian securities outside of Moscow.
In the fast-growing area of medical cannabis, Australian bio-pharma company MGC Pharma became the first medicinal cannabis-related company to join the Main Market as it seeks greater access to UK and European strategic funds and investors; and in the same market arena, Israel’s Kanabo saw its Main Market IPO over-subscribed.
Approximately one-third of all issuers in London are international, and London issuers operate in over 100 countries around the world.
Financing the green economy
Several companies with a renewable energy and infrastructure investment mandate came to the market in this period – Foresight Group, which received London Stock Exchange’s Green Economy Mark at corporate level on listing, and VH Global Sustainability, which invests in a diversified portfolio of sustainable energy infrastructure assets. Another company to receive a Green Economy Mark upon listing was battery cell developer and manufacturer AMTE Power.
This commitment to supporting the financing of decarbonisation is reflected in LSEG’s own group-wide commitment to net zero emissions targets. In this period, LSEG became the first global exchange group to commit to net zero through the Business Ambition for 1.5C and is a member of the United Nations Climate Change ‘Race to Zero’.
London. Always global
The range and scale of fundraising activity in this first quarter of 2021 is powerful testament to London’s capital markets. At a time of major structural shifts in the global economy, London is open to issuers and investors from around the world as they seek to finance and invest in the opportunities that are emerging.