Over £2bn was raised on the London stock market during the last quarter, with tech companies taking the lion’s share and driving the market.
This is according to research by accountancy firm EY which found there were 17 initial public offerings (IPOs) in London in the second quarter (Q2) of 2018, one more than in Q1 and six more than in the equivalent quarter last year.
There were six main market IPOs in the quarter which raised £1.4bn, and 11 floats on AIMwhich raised £697m.
Almost half of the money raised during the quarter (£911m) came from five tech listings.
Scott McCubbin, EY’s IPO leader, said: “The London IPO market is becoming more active and diverse with a strong increase in the market capitalisation of the companies listing.
“The emergence of several technology and gaming IPOs this quarter also demonstrates that the UK can be a leading destination outside of the US for tech IPOs.”
“Looking towards the second half of the year, we can expect to see a significant volume of activity in Q3 and early Q4 as companies rush to take advantage of regulatory stability ahead of Brexit.
“Activity levels in early 2019 are expected to be more subdued due to uncertainty over the UK’s Brexit deal.”
The average market capitalisation during Q2 2018 was nearly £320m across both markets.
Floats during the quarter included Old Mutual's wealth management arm Quilter which listed last month with a valuation of £2.8bn; Team 17, the computer game company behind the Worms series, which floated with a market capitalisation of £217m; and law firm Knights which floated last week with a market capitalisation of £103m.
Simon Wax, financial advisor at accountancy firm Buzzacott, said: “News that London’s tech market has led to a resurgence of flotations in Q2 of this year reiterates its position as a global technology leader and the prosperous opportunities for growing tech companies seeking investment.
“IPOs are a great way to help raise cash quickly, but it’s important that when doing so, tech companies have their long-term future in mind. It can at times be easy for businesses to get excited by investment and act far too quickly.
“Once it arrives, they often pour that into areas that bring immediate gains but are not necessarily the areas that will sustain and drive that business forward.
“Businesses should also remember that there are many other sources of finance available which are often quicker and easier to come by, and are perhaps more aligned to the business’ needs than an IPO.
“To really maximise the value of that funding in the long-term, tech companies should have a longer-term, holistic and honest plan in place before a penny is spent. If the plan then dictates that hiring or office expansion is the right option, then that’s great.
“If London’s tech sector is to continue to thrive and enjoy fruitful investment, businesses need to spend their money wisely.
“Those with a long-term view of their journey from start-up to scale-up and onwards will set themselves up for sustained, long-term success.”
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