London IPO Market Hasn’t Been This Bad in More Than a Decade

(Bloomberg) -- London initial public offerings are off to their slowest start since the global financial crisis, as volatile markets and poor post-listing performances crimp investor appetite.

IPOs in the U.K. tally about $530 million this year, their worst first quarter since 2009, according to data compiled by Bloomberg. Only two London offerings have raised more than $50 million in 2022, as worries about Russia's invasion of Ukraine, soaring inflation and rising interest rates shut IPO markets worldwide.

A string of flops among recent high-profile IPOs is making matters even worse for London. Deliveroo Plc has lost 71% of its value in its first year of trading, with Alphawave IP Group Plc, Oxford Nanopore Technologies Plc, Petershill Partners Plc and Bridgepoint Group Plc also all under water.

“The U.K. IPO market for all intents and purposes is closed at the moment, which is really rare,” said Andrew Peck, co-head of equity sales at Investec. “Currently, the right price in the eyes of the market is clearly too low for people looking to potentially sell a high quality asset.”

The slowdown in deals is hitting U.K. banks, too. On Friday, Numis Corp. warned its revenue will drop sharply compared with the first quarter of 2021, while broker Peel Hunt Ltd. said there's “heightened execution and timing risk” for investment banking transactions.

While Norwegian oil company Var Energi AS and Italian microelectronics maker Technoprobe SpA tapped continental exchanges with large offerings this year, London has only seen delays of big listings by the likes of law firm Mischon de Reya and Olam International Ltd.'s food unit.

Several British companies are considering going public in the U.S. in search of deeper pockets and higher valuations, including money-transfer business Zepz. SoftBank Group Corp. has said it wants to list chipmaker Arm Ltd. in New York. Closer to home, buyout firm CVC Capital Partners is said to mull an Amsterdam IPO, alongside London.

To be sure, Olam and Mischon de Reya are still targeting IPOs at a later date, while others like soda ash producer WE Soda and Blue Owl Capital Inc.'s Dyal Capital Partners are said to work on major offerings in the U.K. this year.

And recent changes to the City's rules for SPAC listings are beginning to pay off, with sizable blank-check companies tapping U.K. investors more than a year after the trend reached a fever pitch in New York.