IPO EyeAn overview of the London Stock Exchange listings in Q2 2021

London listing momentum continues in Q2 2021

1

Market overview

Listing momentum continues to buildFollowing a stellar Q1 performance, the pace of listing activity on the London Stock Exchange has continued into Q2 resulting in the most active H1 for listing activity since 2014, with £9.4bn being raised by issuers.

The Main Market saw 10 IPOs which raised £3.1bn and the Alternative Investment Market (AIM) saw 13 admissions in the quarter raising £664mn. The largest Main Market IPO was Deliveroo plc which raised £1.5bn and the largest AIM admission was Victorian Plumbing Group plc which raised £298mn and in the process became the largest ever AIM listing.

This quarter’s performance is the third busy quarter in a row following the restart of listing activity in Q3 2020, and is in line with levels of activity on other exchanges across the globe. Across both markets listing activity has been driven by the technology sector and tech-enabled businesses, together with strong performances from companies in the health care and life sciences sectors.

Yet again the UK has maintained both its position as the leading listing location in Europe for fund raising and, on a global basis, remains in third place behind the US and China for funds raised via IPO. Follow-on activity has also been strong with over £9bn raised in the quarter by existing issuers representing over 20% of follow-on funds raised in Europe in Q2. Year to date, a total of £27bn of equity capital has been raised demonstrating the depth of market available to issuers.

Main MarketTen floats Raised:

£3.1bnLargest IPO: Deliveroo plcRaised:

£1.5bn

AIMThirteen admissions Raised:

£664mnLargest IPO: Victorian Plumbing Group plc Raised:

£298mn

2

IPO markets — historical performance

Main Market

Main market — 10 floats raised £3.1bn in Q2. The largest by funds raised was Deliveroo plc — which raised £1.5bn.

6

4

2

7

12

11

14 14

9

8 8

19

4

12

4

5

3

23

17

12

10

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

20202016 2017 2018 2019 2021

0

2

4

6

8

10

12

14

16

18

20

0

1,000

2,000

3,000

4,000

5,000

6,000

No.

of I

PO

s

Fund

s ra

ised

£m

n

Funds raised £mn No. of IPOs

3

IPO markets — historical performance

IPO AIM market

AIM — 13 AIM admissions raised £664mn in Q2. The largest by funds raised was Victorian Plumbing Group plc — which raised £298mn.

0

2

4

6

8

10

12

14

16

18

100

200

300

400

500

600

700

800

900

1,000

No.

of I

PO

s

Fund

s ra

ised

£m

n

Funds raised £mn No. of IPOs

9

14

4

9

5

7

16 16

7

16

5

6

1

5

2

3

2

0

3

10

8

13

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

20202016 2017 2018 2019 2021

0

4

Market overviewMarket performanceAs the UK domestic economy has gradually begun to recover from lockdown and the impacts of COVID-19, there has been a gradual rise in the FTSE 250 which has hit record highs in the quarter.

The AIM market has continued to trade well, albeit has shown some volatility after peaking in late April. However, it is still trading well ahead of the position at the start of the year driven by its tech-heavy weighting.

The CBOE Vix index has a year-to-date average of 20.6, just slightly above its 10 year average of 17.7 and down from the highs of 2020, demonstrating that markets are significantly less volatile than they were 12 months ago.

Global IPO activityRiding a wave of momentum from Q1, global IPO activity in Q2 remained strong. Ample liquidity in the financial systems, continuing government stimulus policies, accelerated technology adoption and pandemic-propelled new economy companies contributed to the quarter’s strong showing. Speculative and opportunistic transactions, and soaring equity markets also fuelled IPO activity.

Q2 IPO deal numbers and proceeds were 599 IPOs and US$112bn, respectively. Q2 was the most active second quarter by deal numbers and proceeds in the last 20 years, and beat previous records in Q2 2007 (522 IPOs raising US$88bn).

Overall, there was a healthy spread of IPO activity across many markets, including the US, Mainland China, Hong Kong, the Nordics, Europe (Frankfurt, Paris and Amsterdam), Brazil, Toronto and India by proceeds. Australia, Japan, Norway and Israeli exchanges were also active by deal numbers. Lower volatility has also favoured and increased the IPO activities in Q2.

In Q2, US SPAC IPOs took a pause after record-breaking activities in Q4 2020 and Q1 2021. European SPAC IPO activity grew slightly, with 15 IPOs completed in Q2, versus six in Q1. This compares with six SPAC IPOs on European exchanges completed for the whole of 2020.

50.00

60.00

70.00

80.00

90.00

100.00

110.00

120.00

130.00

140.00

01-0

1-20

20

01-0

2-20

20

01-0

3-20

20

01-0

4-20

20

01-0

5-20

20

01-0

6-20

20

01-0

7-20

20

01-0

8-20

20

01-0

9-20

20

01-1

0-20

20

01-1

1-20

20

01-1

2-20

20

01-0

1-20

21

01-0

2-20

20

01-0

3-20

21

01-0

4-20

21

01-0

5-20

21

01-0

6-20

21

FTSE 100

FTSE 250

FTSE All-Share

FTSE AIM All-Share

5

Market listingsNew Issues — Main MarketDate of admission Company

Private Equity (PE) backed

Country of primary business Sector

Market cap. on admission

(£m)

Funds raised

(£m)

Placing price

(p)

Closing price (after first day of trading)

Closing price at

QTR end (p)

Quarter end % change in price

from IPO

07-Apr-21 Deliveroo plc Yes United Kingdom Software and Computer Services 7179 1,500.0 390.0 287.0 288.4 -26%

14-Apr-21 Mast Energy Developments plc United Kingdom Electricity 23 6.0 12.5 16.3 11.0 -12%

26-Apr-21 PensionBee Group plc United Kingdom Investment Banking and Brokerage Services 365 60.0 165.0 166.2 154.0 -7%

30-Apr-21 Darktrace plc United Kingdom Software and Computer Services 1719 190.0 250.0 330.0 458.8 84%

13-May-21 Alphawave IP Group plc United Kingdom Technology Hardware and Equipment 2726 856.0 410.0 370.0 360.0 -12%

21-May-21 Oxford Cannabinoid Technologies Holdings plc United Kingdom Pharmaceuticals, Biotechnology and

Marijuana Producers 48 17.0 5.0 5.0 3.2 -36%

27-May-21 Taylor Maritime Investments Ltd United Kingdom Industrial Transportation 254 179.0 70.0 73.0 77.0 10%

01-Jun-21 African Pioneer plc Namibia/Zambia Industrial Metals and Mining 7 2.0 3.5 3.3 3.1 -13%

02-Jun-21 Aquila Energy Efficiency Trust plc United Kingdom Closed End Investments 100 100.0 100.0 101.5 95.5 -5%

16-Jun-21 Made.com Group plc United Kingdom Retailers 775 194.0 200.0 197.0 203.5 2%

New Issues — AIMDate of admission Company

Private Equity (PE) backed

Country of primary business Sector

Market cap. on admission

(£m)

Funds raised

(£m)

Placing price

(p)

Closing price (after first day of trading)

Closing price at

QTR end (p)

Quarter end % change in price

from IPO

06-Apr-21 Cornerstone FS plc United Kingdom Industrial Support Services 12 2.0 61.0 61.5 42.5 -30%

22-Apr-21 musicMagpie plc United Kingdom Retailers 208 110.0 193.0 196.5 191.5 -1%

11-May-21 Glantus Holdings plc Ireland Industrial Support Services 37 14.0 102.0 100.0 91.0 -11%

24-May-21 Dianomi Ltd United Kingdom Media 82 37.0 273.0 313.5 330.0 21%

24-May-21 Kitwave Group plc United Kingdom Personal Care, Drug and Grocery Stores 105 82.0 150.0 152.0 168.8 13%

28-May-21 Belluscura plc United States Medical Equipment and Services 51 17.0 45.0 53.0 56.5 26%

28-May-21 Trellus Health plc United States Health Care Providers 65 29.0 40.0 65.0 69.0 73%

03-Jun-21 Arecor Therapeutics plc United Kingdom Pharmaceuticals, Biotechnology and Marijuana Producers 63 20.0 226.0 242.0 237.5 5%

04-Jun-21 Artisanal Spirits Co plc United Kingdom Beverages 78 26.0 112.0 117.5 112.0 0%

22-Jun-21 Victorian Plumbing Group plc United Kingdom Retailers 850 298.0 262.0 330.0 298.0 14%

22-Jun-21 Spectral MD Holdings Ltd United States Health Care Services 80 11.0 59.0 62.0 59.5 1%

28-Jun-21 Itim United Kingdom Software and Computer Services 48 8.0 154.0 156.5 156.0 1%

28-Jun-21 Silver Bullet Data United Kingdom Industrial Support Services 35 9.5 257.0 275.0 322.5 25%

6

Looking forward — H2 2021The London markets have delivered yet another busy quarter and we are expecting this level of activity to continue into H2 once the summer break is over. That said, in the first week of H2, we have already seen the largest ever tech listing in London take place, which was also a ‘direct listing’ where no new funds are raised.

Going into H2, IPO pipelines remain full with a number of listings slated for the second half of the year, although there might be challenges ahead for the economy if infections continue to rise and stimulus packages are gradually withdrawn.

With the introduction of changes from the Hill review, we are likely to see the emergence of UK SPACs in the second half of the year, although in the short term any SPAC activity in the UK will be driven by US SPACs seeking to execute deals before they run out of time and need to return cash to their initial investors.

As ever the sector themes in the second half will be driven by technology and technology-enabled businesses, together with life sciences who have ridden the post-pandemic wave and accelerated business plans. We are also seeing more traditional companies exploring IPO again as a capital event, although their ability to do this will depend on the speed of the return of the economy to more normal conditions and the resilience of their business models to further potential COVID-19 waves.

GloballyAs IPO markets continue their forward momentum, many companies are looking to go public amid favourable conditions. A steady pipeline of US$1bn+ IPOs is expected for the rest of the year. This includes tech unicorns, SPACs and companies in sectors such as renewables, e-commerce and health care, which are expected to remain attractive for IPO investors.

Given the emergence of new waves and the uneven speed at which vaccines are rolling out around the world, the pandemic looks to be something to live with rather than something to be eradicated.

This is the third busy quarter in a row for the UK markets, with high levels of activity on both the Main Market and AIM, and there appears to be no let-up in activity in sight for the remainder of 2021.

Scott McCubbin EY UKI IPO Leader

“

Moreover, H2 may be more challenging as the lingering impact of the pandemic continues to affect companies in many sectors (e.g., traditional retail, travel, tourism, hospitality and real estates), thus dampening investor sentiment. Further, as governments begin to scale back stimulus, tighten monetary policies and use interest rates to manage the threat of inflation, we may see an increase in volatility.

This said, investor confidence will remain high for companies in sectors that have prospered from the lockdown, including e-commerce, food delivery, games and cloud solutions. IPO pipelines continue to grow in many markets as evidenced by companies that have completed new rounds of pre-IPO funding with rising valuations.

For issuers, alongside the ever present need to be well-prepared, companies looking to launch an IPO in H2 will need to be realistic about valuations and it is more important than ever to be prepared to clearly articulate their position on ESG and demonstrate that they are living it on a daily basis.

7

Relevant programmesEY Global IPO Centre of ExcellenceOur Global IPO Centre of Excellence is a virtual hub which provides access to tools and knowledge for every step of the journey from finding out more about what going public means to considering capital raising options and addressing post-IPO risks. It provides access to all our IPO knowledge, tools, thought leadership and contacts from around the world in one easy-to-use source.ey.com/en_gl/ipo

IPO Retreat16–17 May 2022 Looking to float in the next 12–36 monthsOur IPO Retreat helps CEOs and CFOs contemplating an IPO on one of the London markets. It gives unparalleled advice from key advisors and guest speakers who have been through the process, and provides invaluable networking opportunities. The IPO Retreat offers an invaluable opportunity to find out whether an IPO is the right growth option for your business.

To find out more, contact: Aneliya Petrova, apetrova@uk.ey.com

Contacts

For more information about the IPO Eye and on any IPO- related matter, please contact:

Scott McCubbin IPO Leader

Tel: + 44 20 7951 3519 Email: smccubbin@uk.ey.com

Marcus Bailey IPO Business Development Leader

Tel: + 44 20 7951 1357 Email: mbailey2@uk.ey.com

Please visit ey.com/uk/IPO for more information on how we can help you on your IPO journey.

EY | Building a better working world

EY exists to build a better working world, helping to create long-term value for clients, people and society and build trust in the capital markets.Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate.

Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy. EY member firms do not practice law where prohibited by local laws. For more information about our organization, please visit ey.com.

Ernst & Young LLP

The UK firm Ernst & Young LLP is a limited liability partnership registered in England and Wales with registered number OC300001 and is a member firm of Ernst & Young Global Limited.

Ernst & Young LLP, 1 More London Place, London, SE1 2AF.

© 2021 Ernst & Young LLP. Published in the UK.

All Rights Reserved.

EYG No. 0000

EYUK-000140317.indd (UK) 07/21. Artwork by Creative London.

ED None

Information in this publication is intended to provide only a general outline of the subjects covered. It should neither be regarded as comprehensive nor sufficient for making decisions, nor should it be used in place of professional advice. Ernst & Young LLP accepts no responsibility for any loss arising from any action taken or not taken by anyone using this material.

ey.com/uk