Only two companies listed on the London Stock Exchange in the third quarter. The total raised was £64.8m, an 82 percent drop from the same time last year.
EY, an accountancy firm, reports that there were only ten listings this year. They raised a total of £584.6million, a 47 per cent drop from the previous year.
Scott McCubbin is the head of EY’s UK and Ireland Initial Public Offering division. He said that the third quarter of the year was usually a slow time for listing and that the budget of October and concerns about the rate of interest rates cuts and inflation had caused businesses to postpone stock market floatation decisions.
He added that “as we enter the fourth quarter of 2024 we expect some pickup in IPO activity. However, the timing could slip to early 2025.” The continued geopolitical instabilities in Ukraine and the Middle East add to the uncertainty, but are supported by an improving deal pipeline.
The third quarter saw a surge in IPOs, with 310 global flotations raising a combined $24.9 billion.
According to EY, total volumes dropped by 14 percent in the third quarter of this year compared to the same period the previous year. Proceeds also fell 35 percent.
The listing activity in Americas, Middle East, India, and Africa has been resilient this year. Deal numbers and proceeds have grown by digital digits compared to the previous year.
Asia-Pacific experienced a rebound during the third quarter. This was largely due to increased activity on mainland China, Indonesia and Malaysia.
The Financial Conduct Authority has announced that it will overhaul the rules for London listed companies, the most significant change in the last 30 years. This is an effort to revitalize the UK capital markets.
London has been unable to compete against New York in the listing of high-growth startups, while some of the largest UK companies such as Flutter, the bookmaker, and the building materials company CRH have moved their primary listing to the US.
The new rules give more power to the company bosses, who can make decisions without the need for shareholder approval. They also give more flexibility to companies to adopt dual class share structures that are used by venture capitalists and founders. These give them a stronger voting right than other investors.
EY discovered that the artificial-intelligence sector was a major driver of IPOs. In the last two years, more than 60 companies have gone public, with about half of them making a profit. Another 50 AI companies have registered for IPOs.
The accounting firm predicted that lower interest rates and an easing of inflation in the coming year could lead to a surge in new listings in particular in sectors which are more sensitive to borrowing cost.
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