Investor appetite for IPOs improving in UK after ‘muted’ year, Peel Hunt says

Investment bank Peel Hunt has said sentiment towards company listings has started to improve in the UK after a quiet year, but that it still expects to report an annual loss.

The company reported a “resilient” financial performance in challenging market conditions.

Revenues for the year to the end of March are expected to hit about £85.5 million, 4% higher than the previous year.

The increase in sales was driven largely by its investment banking division, particularly from mergers and acquisitions.

Peel Hunt said this will have been achieved despite equity capital markets remaining challenging.

But the rise in sales was “not quite sufficient to offset cost pressures”, the firm said, and it still expects to report an annual loss.

It comes amid a broader slowdown in activity among investors in recent years, reflecting market volatility, economic uncertainties and political tensions.

London has struggled to attract new companies, and several businesses that are listed in the capital have abandoned or downgraded their listing.

These include travel giant Tui, which is ditching its London listing in favour of Frankfurt, building company CRH, which opted to move its primary listing from the FTSE 100 index to New York, and drug maker Indivior, which is considering moving its primary listing to the US this year.

Furthermore, We Soda said last June that it had been forced to cancel its initial public offering (IPO) on the London Stock Exchange due to “extreme investor caution” among UK investors.

It was set to be the UK’s first major IPO of the year.

Peel Hunt said market trading volumes remain low and it expects that to continue until there are meaningful signs of recovery in the UK economy, and investors stop taking money out of funds.

But it offered some green shoots in terms of appetite for company listings.

“Whilst IPO activity in the UK remains muted, there has been more activity in Europe and sentiment towards IPOs is improving in the UK, with investors increasingly willing to engage in relation to high-quality companies,” the firm added.