London flotations lose shine as trio of IPOs fall below listing price

The revival of London’s initial public offerings has suffered a setback, as three companies that floated on the London exchange last month have seen their shares fall below their listing prices. The eagerly anticipated IPOs of Shawbrook, Princes, and Beauty Tech were initially hailed as a signal of momentum returning to the City’s new issues market after years without substantial flotations.

Shawbrook, a specialist bank that secured a £1.9 billion valuation at the end of October, has closed last week with its shares trading at 366.5p, slipping below the 370p listing price. Its lacklustre start follows that of Beauty Tech, a maker of cosmetic devices, and Princes, the owner of the Napolina food brand; both are now also trading beneath their debut valuations.

Beauty Tech launched with an approximate valuation of £300 million at 271p a share, yet now trades at 264p. Princes was listed at 475p a share, with an initial £1.2 billion market valuation, but its shares have since dropped to 437p. The muted performance of these three companies since their flotations raises concerns for investor sentiment and the enduring appeal of London as a premier venue for public listings.

Flotations have long been viewed as a barometer for London’s wider financial health. The market last experienced a surge in IPOs in 2021, which included listings from firms such as Deliveroo, Dr Martens, and Madecom. However, rising inflation and the impacts of Russia’s invasion of Ukraine created challenging conditions for new listings in the following years, adversely affecting both market confidence and valuations.

High-profile disappointments in the previous wave of flotations have further undermined confidence in London as a go-to market. Deliveroo’s share price collapse was followed by its acquisition by DoorDash at less than half its IPO value, while Dr Martens also fell below its listing price and Madecom entered administration.

Increased competition from global exchanges, including those in New York and Amsterdam, adds to the challenge facing London. As a result, British regulators and the government have introduced reforms to loosen listing rules, aiming to retain London’s competitiveness as an international IPO hub. The underperformance of these recent flotations only heightens scrutiny of the City’s prospects in attracting future listings.