London IPOs Drive Europe’s Listings Boom With New Crop of Deals

(Bloomberg) -- February is shaping up to be another busy month for London listings, building on its best start to a year since the global financial crisis as four firms laid out plans Monday for U.K. initial public offerings.

Medical marijuana firm MGC Pharmaceuticals, online auction-marketplace operator Auction Technology Group and investment firms Digital 9 Infrastructure Plc and NextEnergy Renewables Ltd. all said they are planning to tap U.K. investors.

“IPOs are coming into their own now,” said Sam Smith, chief executive officer and founder of British broker finnCap Group Plc. The resurgence in listings shows “that it is not only an exit route but a way to raise growth capital, where you don't necessarily have to go to private equity,” she said.

London has been the main engine of a European IPO market renaissance, accounting for nine out of the 22 listings announced this year in the region and providing three of its top five largest offerings so far, according to data compiled by Bloomberg.

For several years, the specter of the U.K.'s exit from the European Union had hampered London's IPO market, particularly for domestic firms. The Brexit deal struck in December and a strong start to the new year for British stocks lifted much of the anxiety, resulting in a flood of new listings.

The Stoxx Europe 600 Index rallied on Monday, with the U.K.'s FTSE 100 also firmly in the green, buoying market sentiment after a volatile end to January.

Monday's deals also come on the heels of two hot offerings in London. British bootmaker Dr. Martens Plc soared in its debut Friday after a 1.3 billion-pound ($1.8 billion) IPO, while online greeting-card and gifting firm Moonpig Group Plc is set to start trading Tuesday. Both listings wrapped earlier than planned thanks to strong investor demand.

A lot of companies have benefited from the coronavirus crisis, said Smith, adding that there is investor appetite, especially for growth. The pandemic also highlighted the importance of public markets, she said. “Suddenly you had an environment where companies were saying look at all this liquidity, let's put listing plans on the radar again.”

The rush of new listings in Europe this year is driven by beneficiaries of the pandemic's stay-home orders. London's new crop of IPOs is no exception, stemming from sectors either unaffected or boosted by lockdowns.

NextEnergy Renewables is seeking as much as 300 million pounds to invest in a diversified portfolio of global private clean power and energy-transition infrastructure. Auction Technology Group said it plans to list at least 25% of its shares and expects to be eligible for inclusion in FTSE U.K. indexes.

MGC Pharmaceuticals, which already trades in Australia, said it is working through the final steps to list in the City and plans to raise about 5 million pounds. The company, which is developing epilepsy and dementia drugs, will be the first medicinal marijuana to list on the London Stock Exchange after a U.K. watchdog last year gave the green light for such floats.

And Digital 9 said it is looking to raise 400 million pounds on the specialist fund segment of the LSE in March, with a view to investing in digital infrastructure assets that “deliver a reliable, functioning internet.”

Beyond London, demand for new stocks is firing up exchanges in continental Europe. Like Dr. Martens and Moonpig, SoftBank Group Corp.-backed Auto1 Group is expected to price its Frankfurt IPO at the top of an initial price range.

And in Sweden, private equity firm Nordic Capital said it is planning to list its market research company Cint Group AB on Nasdaq Stockholm, while Hydrogen Refueling Solutions said its listing on Euronext Growth Paris will close earlier than expected, given high demand for its shares.

©2021 Bloomberg L.P.