With only four IPOs initiated on the London Stock Exchange this year compared to 15 takeover bids, there's a rising concern among analysts that ³¢´Ç²Ô»å´Ç²Ô’s equity markets are losing robust companies at an alarming rate.
Commenting on this trend, AJ Bell investment analyst Dan Coatsworth expressed concerns about the market's performance, as reported by .
"It's now been nine months since the º£½ÇÊÓƵ general election and the pace of IPOs is nothing more than a dribble," he remarked.
While three out of the four firms initiating public offerings joined the LSE's junior market AIM, Achilles Investment Company was the sole new entrant on the main market with its £54m valuation.
The spectre of rising taxes coupled with the turmoil instigated by US President Donald Trump's tariffs is contributing to "considerable uncertainty" for businesses. This uncertain climate has caused many firms to hesitate in moving forward with IPOs due to fears of volatile market conditions, as pointed out by Coatsworth.
In a related discourse yesterday, Peel Hunt head of research Charles Hall emphasized the "urgent" need to bolster ³¢´Ç²Ô»å´Ç²Ô’s equity markets to raise their appeal for forthcoming IPOs.
Nevertheless, some signs of a turnaround are starting to show, with announcements in March from both authentication technology company Quantum Base and accounting firm MHA that they plan to go public later in the year.
On another front, this year's most significant takeover overtures have featured KKR's £1.6bn bid for Assura, the £1.2bn deal proposed by Greencore for Bakkavor, and Dowlais' £1.1bn proposition from American Axle & Manufacturing.
Most of these acquisitions have been made at a significant premium to the company's market capitalisation, indicating that º£½ÇÊÓƵ equity markets may still be undervalued.
"The second quarter has already got off to a strong start with Qualcomm expressing interest in potentially buying Alphawave IP," observed Coatsworth.
Despite a lacklustre performance from IPOs so far this year, Coatsworth noted that speculation about new entrants is ramping up. Potential candidates for a London float in the coming months include Waterstones, gold mining firm NMMC, and banking group Shawbrook, which was delisted in 2017.
Coatsworth also mentioned rumours that CK Hutchison might list its European, Hong Kong and South-East Asian telecoms operations in London.
In addition to the 15 ongoing takeover situations, Coatsworth pointed out that there are still many potential targets for bidders on the market. These include B&M, whose share price has halved over the past year and is currently trading at 7.6 times its forward earnings.
"It's either a bargain at that price or the market doesn't believe the earnings forecasts," commented Coatsworth.
Halfords is another retailer that many expect to become a target due to its low valuation and the need for radical changes to its business model. Lastly, Jet2's share price is currently at its lowest level since 2023, presenting a potential opportunity for rival airlines to attempt a takeover.
"The holidays company-to-airline operator has a strong market position and a tip-top reputation for good customer service," Coatsworth observed. "It just faces near-term turbulence from cost inflation crimping profit margins and an overly cautious consumer reining in their spending."
