Financial Services power London to the top of EMEIA … Services power London to the top of EMEIA IPOs UK IPO highlights Q3 2017 YTD (January–September 2017) 1 Key trends Commentary

IPO EyeAn overview of the London Stock Exchange listings in Q3 2017

Financial Services power London to the top of EMEIA IPOs

UK IPO highlightsQ3 2017 YTD(January–September 2017)1

Key trends Commentary

Financial sponsor activity fell in Q3 2017 YTD compared with Q3 2016 YTD by deal number

Top three IPOs in Q3 2017 by capital raised

Turkey, US, Ireland, Russia, Myanmar and Channel Islands had one listing each.

Cross-border activity in Q3 2017

Three sectors trending in Q3 2017

“The third quarter was very active with the financial services sector looking to take advantage of the regulatory stability currently available. There was also an increase in cross-border listings, indicating that the UK market’s attractiveness as a listing venue globally is on the rise. However, until we see the return of strong local main market listings, the UK IPO market’s full recovery is not assured.”

Scott McCubbinEY UK and Ireland IPO Leader

Volume and value

London Main Market 42 deals (250% increase on Q3 2016 YTD)

London Main Market £8bn(281% increase on Q3 2016 YTD)

London AIM 32 deals (14% increase on Q3 2016 YTD)

London AIM £1.6bn (100% increase on Q3 2016 YTD)

Sherborne Inverstors Ltd Polyus Gold OAO Greencoat

Renewables plcraised

£700mn(Guernsey, Financials)

raised

£663.2mn(Russia, Mining)

raised

£238.5mn (Ireland, Financials)

IPO pricing and performance

PE and VC accounted for 10% of UK IPOs (5 deals)

12% of proceeds (£0.9bn)

► Q4 2017 will be the most active quarter of the year with the pipeline looking strong for AIM and small Main Market listings — areas that have been largely unaffected by events in the wider economy.

► Rapidly changing market conditions have become the norm over the last few years, but businesses will still look for stability in the pound as a key indicator on whether the time is right to launch an IPO.

► There could be more cross-border IPOs on the London Main Market and AIM in the coming months.

► The number of PE-backed IPOs looks set to increase but not yet returning to the higher level of activity in previous years.

FTSE 100

FTSE 350

FTSE AIM All share

+2.4%

+3.4%

+17.8%

London Main Market2 London AIM2 Equity indices3

first-day average return+4.5%increase in offer price vs. 27 September 2017+11%median post-IPO market cap£183.3mn

first-day average return+8.2%increase in offer price vs. 27 September 2017+12.8%median post-IPO market cap£45.5mn

median deal size£15.6mnmedian deal size£144.8mn

1 Q3 2017 YTD (January-September 2017) IPO activity is based on priced IPOs as of 28 September.

2 Pricing and performance is based on 22 IPOs on London Main Market and 29 IPOs on AIM that have started trading by 27 September. Data as per priced IPOs as of 28 September.3 Year-to-date returns of equity indices as of 27 September 2017.

Real estate4 deals

(GBP£629mn)

Real estate5 deals

Industrials5 deals

Financials11 deals

10%of UK IPOs

London dominates IPO activity with financial services taking centre stage

Market overview

Q3 2017 saw the ongoing Brexit uncertainty prompt a number of businesses to bring their planned listings forward, in order to take advantage of the stable regulatory environment.

There were 30 IPOs on the UK Main Market and AIM in Q3 2017, raising a combined total of £3bn in proceeds, making this one of the busiest EMEIA exchanges for the quarter by number of deals.

The financial sector continued to dominate this quarter, with 11 IPOs connected to this sector, confirming London’s continued presence as a global financial hub. Along with the impetus to take advantage of the current regulatory stability, investor interest is being driven by the quality of the FTSE performance against the low value of the pound, making UK investments of particular interest to international investors.

Outside the real estate and financial services sectors, businesses in the main market and — to a slightly lesser extent — AIM, are still finding it difficult to achieve their desired pricing.

The largest listing outside the financial services sector was the Russian gold producer, Polyus PJSC, which raised £663mn in July; signalling the return of Russian companies to the London market.

Only one IPO this quarter was PE backed, StrixGroup plc, a kettle safety control company, which listed on AIM raising £190mn. The low level of PE-backed activity is indicative of the weak performance of the main market listings outside financial services.

Main market — 14 floats raised £2.1bn in Q3. The largest was by, Sherborne Investors (Guernsey) C Ltd — which raised £700mn.

AIM — 16 AIM admissions raised £916mn in Q3. The largest was by Greencoat Renewables plc — which raised £240mn.

There were 12 cross-border deals in the first nine months of 2017, which accounted for 16% of UK IPOs. This demonstrates the return of global confidence in the UK.

Top three IPOs in Q3 2017 by capital raised

2IPO Eye An overview of the London Stock Exchange listings in Q3 2017

2012 2013 2014 2015 2016 2017

Fund

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mn

Fund raise £mn

No. of IPOsN

o. o

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Os

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8

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1211

14

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2

IPO Main market: historical performance

Market overview

3 IPO Eye An overview of the London Stock Exchange listings in Q3 2017

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No. of IPOs0

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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2012 2013 2014 2015 2016 2017

IPO AIM market: historical performance


Aftermarket performanceDuring this quarter we have seen the markets affected by various global political situations, with UK General Election in June having the greatest impact. However, as the quarter comes to an end the markets have continued their record highs despite the issues with the non-majority UK Government.

Newly listed stocks in Q3 2017 have outperformed veteran assets, which are currently trading an average of 11% above list price.

VolatilityVolatility in currency continues to hold back activity within the large cap IPO market. M&A continues to remain a strong option whilst the pound remains low. The FTSE index’s are seeing a period of stability with the volatility rating remaining low.

FTSE indices 2017 YTD

03-0

1-20

17

03-0

2-20

17

03-0

3-20

17

03-0

4-20

17

03-0

5-20

17

03-0

6-20

17

03-0

7-20

17

03-0

8-20

17

03-0

9-20

17

03-1

0-20

17

FTSE 100 FTSE 250 FTSE All-Share FTSE AIM All-Share

85

90

95

100

105

110

115

120

125

Market overview


Global IPO activity 2017 is proving much better than 2016 for IPOs globally, IPO volume in the first nine months of 2017 (YTD 2017) has already exceeded the full-year totals for 2016. This period saw 1,156 deals raising US$126.9bn in the first nine months of 2017, a healthy increase of 59% by number of IPOs and 55% by proceeds compared with the first nine months of 2016.

Megadeals were back with a bang this quarter and from all parts of the globe. Q3 2017 saw 10 US$1bn+ deals pushing stock exchanges in Brazil, Singapore, Switzerland and India into the list of the world’s top 10 by capital raised, behind Shanghai and Hong Kong.

Asia-Pacific continues to dominate IPO activity both by number of deals and proceeds, accounting for 60% of IPOs and 42% of capital raised worldwide so far in 2017.

Both EMEIA and the Americas exchanges have been more active in the first nine months of 2017 compared with 2016. In EMEIA, the number of IPOs has increased by 38% and proceeds by 47% compared to the first nine months of 2016, while deal number in the Americas is 57% higher and capital raised rose by a significant 151%.

US IPO activity in 2017 appears as a spike because 2016 was an unusually slow year, due to uncertainties surrounding the US election and interest rate hikes, and narrower transaction windows.

Industrials has been the most active sector in Q3 2017 with 70 IPOs, followed by technology with 52 IPOs and consumer products with 39 IPOs. Technology leads by proceeds with US$5.9bn raised.

The proportion of cross-border deals has increased each quarter this year by deal number and capital raised, surpassing full-year 2016 levels.


New Issues — Main market

Date of admission Company PE backed

Country of incorporation

Region/s of domicile Sector

Market cap. on admission (£mn)

Funds raised (£mn) Placing price (p)

Closing price (after first day of trading)

Closing price (at QTR end) % change in price

03-Jul-17 Aberforth Split Level Income Trust plc United Kingdom United Kingdom Equity Investment Instruments 189.77 18.1 100 99 100 100%

03-Jul-17 DP Eurasia NV Turkey Turkey Travel & Leisure 272.57 151.5 200 161 187.5 94%

05-Jul-17 Public Joint Stock Company Polyus Russia Russia Mining 7,626.09 663.2 330 336 384 116%

12-Jul-17 Fandango Holdings plc United Kingdom United Kingdom Nonequity Investment Instruments 1.15 0.8 1 1.25 1.25 125%

12-Jul-17 Residential Secure Income plc United Kingdom United Kingdom Real Estate Investment Trusts 738.50 180.0 100 100 101 101%

12-Jul-17 Rockpool Acquisitions plc United Kingdom United Kingdom Nonequity Investment Instruments 182.02 1.1 5 8 9.5 190%

12-Jul-17 Sherborne Investors (Guernsey) C Ltd Guernsey Guernsey Equity Investment Instruments 1.68 700.0 100 102 105.5 106%

19-Jul-17 Gabelli Merger Plus+ Trust plc United States United States Equity Investment Instruments 76.60 76.0 10 10.5 10.32 103%

21-Jul-17 Supermarket Income REIT plc United Kingdom United Kingdom Equity Investment Instruments 100.00 100.0 100 101 100 100%

08-Aug-17 Triple Point Social Housing REIT plc United Kingdom United Kingdom Equity Investment Instruments 204.00 200.0 100 101.75 102 102%

22-Aug-17 Myanmar Strategic Holdings Ltd. Myanmar Myanmar Real Estate Investment & Services 16.81 3.2 10 9.5 10 100%

30-Aug-17 Chesterfield Resources plc United Kingdom United Kingdom Nonequity Investment Instruments 1.57 1.3 5 5 5.5 110%

21-Sep-17 Stapleton Capital plc United Kingdom United Kingdom Nonequity Investment Instruments 1.50 1.5 5 5 5 100%

22-Sep-17 Baskerville Capital plc United Kingdom United Kingdom Nonequity Investment Instruments 1.80 1.8 5 1 6.5 130%

New Issues — AIM








05-Jul-17 GYG plc United Kingdom United Kingdom Industrial Transportation 62.96 28.4 100.00 112.50 135.00 135%

06-Jul-17 Tatton Asset Management plc United Kingdom United Kingdom Financial Services 101.19 51.6 179.84 189.00 181.00 101%

11-Jul-17 Nexus Infrastructure plc United Kingdom United Kingdom Construction & Materials 73.38 35.0 185.00 191.50 192.50 104%

13-Jul-17 Angling Direct plc United Kingdom United Kingdom General Retailers 35.69 9.0 64.00 67.00 83.00 130%

25-Jul-17 Arena Events Group plc United Kingdom United Kingdom Travel & Leisure 67.06 60.0 60.00 58.00 58.50 98%

25-Jul-17 Greencoat Renewables plc Ireland Ireland Equity Investment Instruments 256.61 238.5 1.00 1.04 1.07 107%

28-Jul-17 Quiz plc United Kingdom United Kingdom General Retailers 221.75 102.7 161.00 190.00 178.50 111%

04-Aug-17 GetBusy plc United Kingdom United Kingdom Software & Computer Services 14.52 3.0 28.30 35.00 30.00 106%

08-Aug-17 Strix Group plc United Kingdom United Kingdom Electronic & Electrical Equipment 260.30 190.0 100.00 130.00 137.00 137%

10-Aug-17 Verditek plc United Kingdom United Kingdom Alternative Energy 10.77 2.8 9.00 8.75 8.50 94%

10-Aug-17 Altus Strategies Ltd United Kingdom United Kingdom Mining 15.95 1.1 10.00 10.30 10.00 100%

11-Aug-17 Xpediator plc United Kingdom United Kingdom Industrial Transportation 28.74 5.0 24.00 24.97 28.50 119%

17-Aug-17 Wilmcote Holdings plc United Kingdom United Kingdom Nonequity Investment Instruments 27.60 15.0 120.00 132.50 132.50 110%

04-Sep-17 Destiny Pharma Ltd United Kingdom United Kingdom Pharmaceuticals & Biotechnology 67.89 15.0 157.00 217.00 163.00 104%

05-Sep-17 appScatter Group plc United Kingdom United Kingdom Software & Computer Services 43.28 9.0 65.00 75.00 68.00 105%

20-Sep-17 Warehouse REIT plc United Kingdom United Kingdom Real Estate Investment Trusts 168.49 150.0 100.00 101.00 101.50 102%

Market listings


New Issues — Main market








03-Jul-17 Aberforth Split Level Income Trust plc United Kingdom United Kingdom Equity Investment Instruments 189.77 18.1 100 99 100 100%

03-Jul-17 DP Eurasia NV Turkey Turkey Travel & Leisure 272.57 151.5 200 161 187.5 94%

05-Jul-17 Public Joint Stock Company Polyus Russia Russia Mining 7,626.09 663.2 330 336 384 116%

12-Jul-17 Fandango Holdings plc United Kingdom United Kingdom Nonequity Investment Instruments 1.15 0.8 1 1.25 1.25 125%

12-Jul-17 Residential Secure Income plc United Kingdom United Kingdom Real Estate Investment Trusts 738.50 180.0 100 100 101 101%

12-Jul-17 Rockpool Acquisitions plc United Kingdom United Kingdom Nonequity Investment Instruments 182.02 1.1 5 8 9.5 190%

12-Jul-17 Sherborne Investors (Guernsey) C Ltd Guernsey Guernsey Equity Investment Instruments 1.68 700.0 100 102 105.5 106%

19-Jul-17 Gabelli Merger Plus+ Trust plc United States United States Equity Investment Instruments 76.60 76.0 10 10.5 10.32 103%

21-Jul-17 Supermarket Income REIT plc United Kingdom United Kingdom Equity Investment Instruments 100.00 100.0 100 101 100 100%

08-Aug-17 Triple Point Social Housing REIT plc United Kingdom United Kingdom Equity Investment Instruments 204.00 200.0 100 101.75 102 102%

22-Aug-17 Myanmar Strategic Holdings Ltd. Myanmar Myanmar Real Estate Investment & Services 16.81 3.2 10 9.5 10 100%

30-Aug-17 Chesterfield Resources plc United Kingdom United Kingdom Nonequity Investment Instruments 1.57 1.3 5 5 5.5 110%

21-Sep-17 Stapleton Capital plc United Kingdom United Kingdom Nonequity Investment Instruments 1.50 1.5 5 5 5 100%

22-Sep-17 Baskerville Capital plc United Kingdom United Kingdom Nonequity Investment Instruments 1.80 1.8 5 1 6.5 130%

New Issues — AIM








05-Jul-17 GYG plc United Kingdom United Kingdom Industrial Transportation 62.96 28.4 100.00 112.50 135.00 135%

06-Jul-17 Tatton Asset Management plc United Kingdom United Kingdom Financial Services 101.19 51.6 179.84 189.00 181.00 101%

11-Jul-17 Nexus Infrastructure plc United Kingdom United Kingdom Construction & Materials 73.38 35.0 185.00 191.50 192.50 104%

13-Jul-17 Angling Direct plc United Kingdom United Kingdom General Retailers 35.69 9.0 64.00 67.00 83.00 130%

25-Jul-17 Arena Events Group plc United Kingdom United Kingdom Travel & Leisure 67.06 60.0 60.00 58.00 58.50 98%

25-Jul-17 Greencoat Renewables plc Ireland Ireland Equity Investment Instruments 256.61 238.5 1.00 1.04 1.07 107%

28-Jul-17 Quiz plc United Kingdom United Kingdom General Retailers 221.75 102.7 161.00 190.00 178.50 111%

04-Aug-17 GetBusy plc United Kingdom United Kingdom Software & Computer Services 14.52 3.0 28.30 35.00 30.00 106%

08-Aug-17 Strix Group plc United Kingdom United Kingdom Electronic & Electrical Equipment 260.30 190.0 100.00 130.00 137.00 137%

10-Aug-17 Verditek plc United Kingdom United Kingdom Alternative Energy 10.77 2.8 9.00 8.75 8.50 94%

10-Aug-17 Altus Strategies Ltd United Kingdom United Kingdom Mining 15.95 1.1 10.00 10.30 10.00 100%

11-Aug-17 Xpediator plc United Kingdom United Kingdom Industrial Transportation 28.74 5.0 24.00 24.97 28.50 119%

17-Aug-17 Wilmcote Holdings plc United Kingdom United Kingdom Nonequity Investment Instruments 27.60 15.0 120.00 132.50 132.50 110%

04-Sep-17 Destiny Pharma Ltd United Kingdom United Kingdom Pharmaceuticals & Biotechnology 67.89 15.0 157.00 217.00 163.00 104%

05-Sep-17 appScatter Group plc United Kingdom United Kingdom Software & Computer Services 43.28 9.0 65.00 75.00 68.00 105%

20-Sep-17 Warehouse REIT plc United Kingdom United Kingdom Real Estate Investment Trusts 168.49 150.0 100.00 101.00 101.50 102%


Rapidly changing market conditions have become the norm over the last few years, but businesses will still look for stability in the pound as a key indicator on whether the time is right to launch an IPO.

Although investor sentiment for IPOs is improving, we do not anticipate a marked uptick in activity while other opportunities for investment, such as equities with an established dividend history, continue to perform.

The number of PE-backed IPOs looks set to increase. However, we do not expect a return to the levels of previous years. The high levels of cash reserves held by the PE market mean that many are likely to delay listing while valuations remain low.

Proposed reforms by the Financial Conduct Authority (FCA), to make it easier for state-owned foreign companies to list their shares and to bring the UK IPO process more in line with US practices, are now to be reviewed by two separate parliamentary select committees: the Treasury Select Committee and the Business, Energy and Industrial Strategy Committee.

The FCA’s proposed reforms, if implemented, will support future IPO activity and will be instrumental in the pending decision by the world’s largest oil company, Saudi Aramco, as to whether it lists in London or New York.

Looking forward — 2017

“ The third quarter was very active with the financial services sector looking to take advantage of the regulatory stability currently available. There was also an increase in cross-border listings, indicating that the UK market’s attractiveness as a listing venue globally is on the rise. However, until we see the return of strong local main market listings, the UK IPO market’s full recovery is not assured.”

Scott McCubbin EY UKI IPO Leader

Overall, we expect that Q4 2017 will be the most active quarter of the year with the pipeline looking strong for AIM and small Main Market listings—areas that have been largely unaffected by events in the wider economy.

We expect that until the pound stabilises and there is greater certainty and clarity regarding the process and terms of the UK’s withdrawal from the EU, we will not see a full recovery of the UK IPO market, particularly of local listings on the main market.


GloballyGlobal IPO activity for 2017 is on course to be the busiest year since 2007 with 1,600 to 1,700 IPOs raising US$190bn to US$200bn. This is due to rallying markets, low volatility, strengthening investor sentiment and a healthy pipeline, absent any concerns emanating from the Korean Peninsula.

Asia-Pacific is expected to continue to see robust IPO activity for the rest of 2017. China is expected to remain dominant due to massive demand for technology IPOs while the Australian IPO market is expected to continue to be strong, led by exceptional post-IPO performance and the return of resources companies.

After a quiet summer, US IPO market activity is accelerating as equity indices are near all-time highs and volatility remains low.

Elsewhere in the Americas, strong activity levels in Brazil are expected to continue to the end of 2017.

EMEIA should finish the year on a high, with positive momentum fuelled by solid economic fundamentals. Activity in Europe should also remain strong going into Q4 2017. However, investors remain selective and appetite for new stocks may be impacted if the European Central Bank (ECB) decides to reduce its asset purchases at the beginning of 2018. Meanwhile, the fluctuating value of the euro presents another source of uncertainty. IPO activity in India is headed for a record year. More activity from the Middle East is expected.


For more information about the IPO Eye and on any IPO — related matter please contact:

Scott McCubbinIPO Leader

Tel: + 44 20 7951 3519Email: [email protected]

Neil GloverBusiness Development Director, UK London

Tel: + 44 20 7951 5664Email: [email protected]

Contact us

Please visit www.ey.com/uk/IPO for more information on how we can help you or your business.

IPO Eye An overview of the London Stock Exchange listings in Q3 201711


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Relevant programmes

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From origination to exit, how much value can your capital create?


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Financial Services power London to the top of EMEIA … Services power London to the top of EMEIA IPOs UK IPO highlights Q3 2017 YTD (January–September 2017) 1 Key trends Commentary