UK Equity Capital Markets 2021-2022: Market Tracker Trend Report

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The report also provides analysis and commentary on current and emerging trends in this area and includes insight into what we might expect to see in 2022.The Lexis®PSL Market Tracker trend report examines the current dynamics of equity capital market (ECM) activity within the UK in 2021. It reviews a total of 124 IPOs (58 on the Main Market and 66 on AIM) and 192 secondary offers (84 on the Main Market and 108 on AIM) which completed in 2021 and looks at transactions completed in 2018, 2019 and 2020 for comparative purposes.

Topics covered include:

• a four-year comparative overview of Main Market and AIM transaction volume, market capitalisation and gross proceeds
• key 2021 transactions in focus including Deliveroo’s £4.9bn dual class share structure IPO, Wise’s groundbreaking direct listing and the first SPAC to list under the new listing rules, Hambro Perks Acquisition Company
• detailed industry sector analysis for IPOs and secondary offers
• an overview of the geographic regions fuelling IPO activity
• fundraising structure statistics and a look at the increasing popularity of targeted retail offers
• analysis on the use of cornerstone investors
• focus on SPACs
• a review of dual class share structures used to date
• legal and regulatory developments, including consultations and rule changes following the UK Listing Review
• predictions for 2022

Report highlights:

Main Market IPOs

On the Main Market, IPO deal volumes increased by 76% and the aggregate value of all companies completing IPOs more than tripled. However, aggregate funds raised by companies in Main Market IPOs fell by 20% (largely due to some large GDR issues in 2020). As in previous years the investment sector continued to dominate Main Market IPO activity, however the Computing & IT sector also saw some large fundraisings reflecting an increase in technology companies coming to the market.

AIM IPOs

AIM had an exceptional year in 2021 with IPO transaction volumes increasing more than four times the level in 2020. Aggregate gross proceeds raised in AIM IPOs increased by more than five times the amount in 2020. Activity was bolstered by some very high value IPOs including Victorian Plumbing Group which was the largest AIM IPO of all time in terms of market capitalisation valued at almost £1bn.

Secondary offers

2021 was another strong year for secondary fundraisings with overall deal volume at a similar level to 2020. However, funds raised in Main Market secondary offers in 2021 decreased by 34% from 2020. The picture on AIM was different with secondary offer gross proceeds increasing by 37%.

The highest grossing sector for Main Market secondary fundraisings was Travel, Hospitality, Leisure & Tourism which featured large rights issues by EasyJet and TUI AG as these companies continued to seek equity finance to repay debt incurred during the pandemic. On AIM, Healthcare, Pharmaceuticals & Biotechnology was the top sector in terms of funds raised and transaction volume reflecting the interest of investors in this sector since the start of the pandemic.

Fundraising trends

2021 saw an increasing number of companies include a small retail offer as part of their fundraising often using the PrimaryBid platform to facilitate the retail element. PrimaryBid was involved in 20 IPOs and 73 secondary offers in our data set in 2021. Cornerstone investors have also become more of a feature of IPOs with 16 IPOs in 2021 involving cornerstone investments.

Legal and regulatory developments

In 2021 the government and FCA moved at pace to reform the UK listing and prospectus regime following Lord Hill’s recommendations to enhance the London markets. Key developments include:

• significant reforms to the Listing Rules including lowering the free float requirement to 10%, allowing companies with dual class share structures to list on the premium listing segment and removing the requirement for a SPAC’s shares to be suspended on the announcement of an acquisition
• a radical overhaul of the UK prospectus regime was started which should take much secondary fundraising activity outside of prospectus requirements as well as removing duplication in the regime, making it more agile and delegating more responsibility to the FCA
• the launch of a secondary capital raising review by Mark Austin
• a second consultation on the future of the whole UK regulatory framework for financial services
• a consultation on a power to block listings on national security grounds.

Market commentary:

The report contains expert commentary from:

• Nicholas Holmes, Partner - Ashurst
• Ben Wright, Co-Head of Corporate Broking and Advisory - Berenberg
• Clive Hopewell, Partner – Bird & Bird
• Alasdair Steele, Partner – CMS
• Ariel White-Tsimikalis, Partner – Goodwin Procter
• Chris Horton, Partner, James Inness, Partner & Anna Ngo, Partner - Latham & Watkins
• Marcus Stuttard, Head of AIM and UK Primary Markets – London Stock Exchange Group
• Jonathan King, Partner, Osborne Clarke
• Julian Stainer, Partner & Gareth Jones, Partner - Pinsent Masons
• Tim Ward, CEO – Quoted Companies Alliance
• Hannah Kendrick, Partner, Jayson Marks, Partner & Nina Driver, Practice Development Lawyer – Squire Patton Boggs
• James Spinney, Head of Capital Markets – Strand Hanson
• Andrew Gillen, Partner - Travers Smith