Brexit: Stock market listings collapse 60% in 2016 amid volatility and uncertainty

A total of 34 flotations scrapped as firms blame poor market condidtions - upcoming elections in France, Germany and Netherlands could cause more disruption

(Reuters)

The amount of money raised from new London stock market listings collapsed this year this year as firms postponed or cancelled plans amid Brexit uncertainty.

Figures from PwC show the number of new London Stock Exchange flotations down 35 per cent in 2016, compared with a year earlier. Those deals have also been smaller on average. European initial public offerings halved in 2016 to €28.4 billion (£23.9 billion), while 34 flotations were withdrawn or postponed.

UK stock market listings have struggled to gather support from investors after the Brexit vote, with waste management firm Biffa slashing the price of its share offering and fitness chain Pure Gym blaming market volatility after it scrapped plans to publicly list its shares in October. Software firm Misys pulled the plug on its flotation on similar grounds, citing "market conditions".

However, there have been some successes. Medical products firm ConvaTec - which was the largest UK flotation this year - raised £1.4 billion from its October IPO. London still ranked as one of the top three exchanges in Europe for raising the most cash from IPOs.

"The ConvaTec IPO was not without its obstacles as there had to be a compromise on price to get a deal done - a recurring theme during the second half of 2016,” Lucy Tarleton, Capital Markets director at PwC, said.

"Despite the lower level of IPO volumes in London in 2016, as with previous quarters, AIM has seen healthy activity levels, with a number of new companies set to join the market before the end of the year."

Sweden’s Nasdaq Nordic beat London this year, raising €7.7 billion (£6.5 billion) from 69 IPOs compared to London’s £5.4 billion from 60 deals. By comparison, Germany's Deutsche Borse raised €5 billion (£4.2 billion) through 11 offerings.

Mark Hughes, Capital Markets leader at PwC, warned that elections in France, Germany and the Netherlands next year could potentially "unsettle" IPO markets across Europe.

"Despite the uncertainty that this brings, the European IPO pipeline looks healthy, as investors seek out investment opportunities with compelling and well-supported equity stories.

"The pipeline of cross-border IPO activity is also beginning to build, with a number of international companies looking at listing in London.

"As a result of the current economic and political outlook, investors will continue to be more selective, backing IPO candidates with an attractive valuation, a differentiated product and an equity story which is underpinned by strong performance."