Boost for UK plc as IPOs surge
56 initial public offerings or IPOs in London have raised £8.5bn to the end of July, already surpassing the total amount raised for the whole of 2016. This is a significant boost for UK Plc and another vote of confidence in our economy and the UK’s ability to fund the world.
And looking at the figures more closely, what is apparent is the innovation continuing to take place across our financial markets, with close to £2.5bn raised through fund IPOs.
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Hide AdListed funds, raising money from a pool of investors to back a number of investments across different sectors such as housing and renewable energy, are increasingly popular investment tools.
In 2017 alone, we’ve welcomed microcap funds, supporting SMEs, real estate specific funds for social housing and private rented sector and life sciences debt funds.
We marked a record first half of the year for fund listings and money raised on London Stock Exchange last month. The total capital raised by funds and real estate investment trusts (REITs), another type of fund structure, during the six months to end June reached £5bn. Nine fund IPOs raised £1.4bn whilst existing London-listed funds raised £3.6bn in follow-on fundraisings.
What we’re seeing is that many of these funds are investing in the real economy, benefiting the wider public as well as shareholders. In March BioPharma Credit became the first London listed fund specialising in debt financing for the life sciences industry. A vibrant UK life sciences sector is critical to us all, supporting the development of knowledge and discovery of new medicines and treatments for diseases.
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Hide AdWhat is also noticeable is the attractiveness of the UK markets to US fund managers. Over £4.4bn has been listed in London by US fund managers in 2017 alone. Just last month, New York-based Gabelli Merger Plus+ Trust PLC became the fifth fund from a US-based manager to list here, joining US-based Pershing Square Holdings which transferred its £2.9bn listing from Amsterdam to London earlier in the year.
The UK has a long history in supporting the growth of the global asset management industry. One of the first fund management businesses was set up in Scotland in 1873 to invest money in America and to this day, The Scottish American Investment Company, is still trading on our markets. And almost 150 years later, the UK, with London Stock Exchange at its financial centre, remains the destination of choice for international asset managers.
According to a market study last year by the UK regulator, the Financial Conduct Authority, the UK’s asset management industry is the second largest in the world, managing £6.9 trillion of assets. Over £1 trillion is managed for UK retail (individual) investors and £3 trillion on behalf of UK pension funds and other institutional investors. The industry also manages around £2.7 trillion on behalf of overseas clients.
Through London, UK and global asset mangers have access to a unique financial services ecosystem: deep, liquid pools of multi-currency investor capital; robust, transparent and trusted markets; a legal system that treats investors of all nationalities equally; the largest concentration of leading financial services advisers and an advantageous time zone that bridges Asia, the Middle East, Europe and North America.
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Hide AdAnd in the current macro economic environment with interest rates at historic lows, funds can provide strong yields for investors looking to diversify their portfolios and benefit from long-term economic growth but with the usual proviso that any investment carries risk. At the time of writing, over 90 per cent of 2017’s fund IPOs are currently trading at a premium to their net asset value, meaning the stock value of the fund is trading higher to the net asset value of the funds’ components.
2017’s UK listed fund and general IPO activity is testament to the enduring strength of the UK economy. We are a global market place and the international listing destination of choice for equities, fixed income and funds; whether to raise capital or to enable investors worldwide more efficient access to trade these securities.
Echoing what the Lord Mayor of London, Dr Andrew Parmley, recently said, “when companies have access to the UK, they have access not only to London’s deep pools of capital and business expertise, but the world’s as well.”
2017 notable fund listings:
Residential Secure Income plc raises £180m to acquire portfolios of homes across residential asset classes
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Hide Ad Sherborne Investors raises £700m on the Specialist Fund Segment of the Main Market
BioPharma Credit, the first London listed fund specialising in debt financing for life sciences industry, raises £608m on the Specialist Fund Segment
US-based Pershing Square Holdings successfully lists its £2.9bn fund, originally listed in Amsterdam
PRS REIT, the first listed fund to focus solely on Private Rented Sector properties, raises £250m
Impact Healthcare Trust raises £160m to invest in a portfolio of care homes
461 funds are quoted on London Stock Exchange