3rd March 2015

Smaller Companies Choose IPOs to Fund Growth

The volume and value of Initial Public Offerings (IPOs) on London's junior market increased last year as SMEs sought funding for growth, according to data from global information services company Experian.

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Smaller Companies Choose IPOs to Fund Growth

There were 75 IPO transactions on London Stock Exchange’s (LSE) AIM last year worth a total of £2.5 billion, an increase in value of 134 per cent on 2013.

IPOs on AIM provide an opportunity for SMEs to seek growth funding, while the increased activity will also encourage business owners looking for an alternative to a sale.

Wholesale and Retail was the most active sector, contributing 41 per cent to the overall value of transactions, followed by Manufacturing (34 per cent) and the Information and Communication sector (24 per cent). Finance and Insurance services was the third most active sector on London’s junior market in 2013, contributing 30 per cent of the value, but only ranked in fifth place last year, accounting for 12 per cent of the total transaction value.

The volume and value of IPOs on the LSE’s main market also increased last year. The number of IPOs went up by 43 per cent from 40 to 57, while the total value rose to £12 billion, up 12 per cent on the £10.6 billion recorded in 2013. This was the highest level of volume and value recorded on London’s main market since 2007. Large IPOs worth more than £100 million dominated the main market, and private equity investors were involved in 20 of the large transactions, accounting for £7 billion of the total.

Financial and Insurance services was the most active sector on the London Stock Exchange last year, raising £5.5 billion through 39 deals, followed by the Wholesale and Retail sector, which completed 32 transactions worth £5.5 billion combined, while the Information and Communication sector completed 27 transactions worth £3.3 billion.

Wendy Driver, Business Development Manager at Experian UK&I, said: “The growing number of IPOs on the AIM suggests smaller businesses are increasingly considering listing as an option to secure the funding they need to take their company to the next level. Business owners may be curious about what their company could be floated for and should look back at IPOs of companies similar in size and sector in previous years to decide whether it’s an option they wish to explore further.”

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