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Buoyant City braced for listing stampede

BY Rachel | 3 August, 2014 | no comments

Flotations worth about £3 billion are expected to be unveiled this week as London’s main market heads towards a record-breaking year.

Patric Johnson, the head of securities at Panmure Gordon, said that some planned flotations had been delayed by fears over the fallout from a “yes” vote. “All the banks had decided there was too much ambiguity [and fears] of a flight of capital away from the UK. Now everything is back on,” he said.

Jimmy Choo is expected to make a decision this week, with a listing likely to take place at the end of next month or in early November. The flotation would price the shoe brand at about £800 million on a valuation thought to be more than 12 times next year’s projected profits.

Aldermore, which specialises in lending to small businesses, is poised to finalise its preparation for a flotation that could value the bank at £900 million. The lender is owned by AnaCap, a private equity firm.

RAC , meanwhile, is weighing up a proposed £1.5 billion listing that would result in a huge windfall for its senior management. The company is understood to be waiting until the AA publishes its results on Tuesday before making a final decision. Other options, including a trade sale, are being considered.

The stock exchange is set to shake off concerns that it was due for a slowdown, with some analysts predicting a pre-recession level of listings for the end of the year. Analysis by Capita found that across the London Stock Exchange’s main, AIM and international markets, IPOs are expected to raise £18.5 billion this year — more than twice the £8.3 billion raised last year.

“If people float sensible businesses at sensible valuations, it will be a good year,” Mr Johnson said.

He said that confidence had been shaken temporarily by flotation that had been overly ambitious: “In the first quarter, 70 per cent of flotations were in the top of [their valuation] range; by the second quarter 69 per cent were at the bottom end.”

Fred Walsh, also of Panmure Gordon, said that an improving economy and indications that interest rates would not rise until next year, combined with the Scottish referendum result, were contributing to improving confidence in capital markets.

“People had various concerns and the referendum was huge. The positive decision, as far as the City is concerned, means that companies are more comfortable [about going ahead with flotations],” he said.