More floats on the way
INVESTORS desperate for a bit of good news should hold on for an uplift in stock market activity.
Flotations are set to pick up in the second quarter and there are likely to be plenty of opportunities out there for the private investor.
Three companies have listed on the main market so far this year and 22 on the Alternative Investment Market.
Three may seem like a small number, but the pipeline of companies planning to come to market is growing, according to KPMG Corporate Finance.
The three companies to list on the main market were Cambridge Sililcon Radio, raising £89m, Ark Therapeutics, which raised £55m, and the dual London/Dubline listing of Eircom, which raised £544m.
Neil Austin, head of new issues at KPMG, said there was growing appetite in the City for new investment opportunities, but not every company that comes to the market will get off safely.
'After the market had effectively closed for so long, it is not surprising that there is a lead time before companies can take advantage of more favourable conditions. The second quarter promises to be busier although only quality companies priced realistically are likely to find an enthusiastic reception.'
AIM's 22 initial public offerings (IPOs) include the accelerated flotation of publishing group Centaur, which raised £132m.
The improved picture for UK investors is mirrored by similar developments on the continent. Activity has returned to the main European stock markets this year.
In the first quarter last year there wasn't a single flotation to raise more than £13m but so far this year eight separate deals have raised a total of £4.03bn, including Belgacom - the largest IPO in the world this year.
According to KPMG's Neil Austin, companies with proven track records or established market positions are confident about their flotation prospects - and with good reason:
'In the UK we are continuing to see a small number of successful companies, with proven track records or market positions, aiming for an IPO.
'An IPO is now a genuine option for some when considering realisation strategies - but only for the right companies with traditional valuation metrics. It remains to be seen how many of the companies that have said they are considering a flotation will actually end up on the market.'
'Confidence is still somewhat fragile and there is probably a limited supply of companies of very high quality which is what the market seems to require. We are certainly not looking at a tech-style boom with dozens of companies queueing up to join the market.'
