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Market Tracker reviewed IPO deal activity in the first half of 2021, with a focus on the legal advisers who have acted for the companies and financial advisers involved. Our research indicates that Linklaters, Freshfields and Latham & Watkins secured roles on the biggest IPOs of the year so far, Travers Smith and Osborne Clarke claimed the most mandates on the issuer side, and Pinsent Masons tops the table as the most instructed firm on the financial advisers/underwriters side (by volume of deals). CMS Cameron McKenna Nabarro Olswang, BDB Pitmans, and Fieldfisher round out the list of the firms instructed on the most deals in H1 2021.
Market Tracker spoke with the lawyers behind the key transactions to get their feedback on what has been driving the market, and what we can expect to see in the second half of the year. There was an overall consensus that a significant increase in deal activity, a creative and flexible approach to transactions, and favourable changes to the listing regime on the horizon all add up to an extremely positive outlook for the London markets.
IPO activity in H1 2021
IPO deal volume hit new heights in H1 2021, with a total of 47 companies successfully admitted to trading on the London markets (Main Market: 24; AIM:23). The first quarter of 2021 saw 23 IPOs, making it the busiest Q1 in the past four years. The second quarter of the year has continued at a similar pace, with 24 IPOs admitted to trading. This sustained increase in activity follows on from the dramatic increase in IPO volume seen in the last three months of 2020, where pent-up demand gave way to a flurry of deal activity, following a prolonged period of Brexit and COVID-19 pandemic related market volatility and increased investor caution. For more information on the key trends emerging from 2020, see: Market Tracker Trend Report: Trends in UK Equity Capital Markets 2020/21.
Market Tracker has conducted research on the legal advisers to the issuer and the financial advisers of these transactions, sourcing data from the Market Tracker transaction data analysis tool which allows users to access, analyse and compare the specific features of corporate transactions. The scope of the transactions covered by Lexis®PSL Market Tracker in this update includes IPOs admitted to trading on the Main Market or AIM between 1 January 2021 and 30 June 2021. Our IPO data excludes introductions and transfers between markets.
Firms most frequently instructed as legal adviser to the issuer H1 2021 (Main Market and AIM)
In relation to Main Market IPOs, Travers Smith led the way in securing a position as adviser to the company, acting on three IPOs on the issuer side, including a listing by Auction Technology Group plc (Auction Topco Limited) valued at £600m on admission, a £455m IPO by Foresight Group Holdings plc, and in the last week of H1, a successful admission to trading for Literacy Capital plc. The company also advised Jefferies International as the sponsor and sole bookrunner in the Taylor Maritime Investments IPO. Andrew Gillen, Head of Corporate M&A and ECM at Travers said:
‘The surge in IPO activity on leading markets around the world has been a significant feature of the rebound in the economy since the end of 2020, spurred on by the vaccine rollout. London has led the way on this in Europe with 21 IPOs raising £7.3bn (€8.4bn) in Q1 alone. We are delighted that our ECM practice has played a leading part, representing issuers and underwriters on four IPOs on the Main Market and AIM during 2021 so far, following a strong 2020 in which we acted on eight IPOs and over 20 secondary fundraisings and are seeing a strong pipeline of transactions for the rest of this year.’
Freshfields Bruckhaus Deringer bagged a spot as adviser to the company for two of the year’s largest transactions, the market debut of iconic British footwear brand, Dr Martens, which was valued at £3.7bn on admission and joined the ranks of the FTSE 250 blue chips in the latest quarterly reshuffle, and the high-profile £8.2bn listing by Deliveroo, which attracted attention for its unique dual-class share structure and the company’s decision to list on the standard segment of the Main Market. Freshfields also acted on the £1.72bn Darktrace IPO, for financial advisers Jefferies International, Joh. Berenberg, Gossler & Co. KG, and KKR Capital Markets Partners. The Deliveroo and Darktrace transactions were led by Mark Austin, a partner in the Freshfields global transactions group who specialises in capital markets. Austin, who also chairs the FCA’s Listing Authority Advisory Panel and advised Lord Hill on his recent UK Listings Review, commented:
‘The first half of the year saw the London IPO market fully open for business with companies of all sizes coming to market across a range of sectors. There was innovation in the market as well, with for example Deliveroo employing a dual class share structure similar to that used by tech companies that list in the US, a form of which was also used by The Hut Group on its IPO. London also saw the publication of Lord Hill’s UK Listing Review, which was welcomed by the FCA and the Government, and which recommended further reform for the market aimed at maintaining and enhancing London’s position as a leading global listing venue.’
Osborne Clarke have acted as adviser to the company in the most AIM transactions overall, landing a spot on the e-commerce apparel brand In the Style Group’s £105m IPO, as well as on IPOs for AMTE Power plc and Team plc, all of which were all admitted to AIM in the first half of 2021.
CMS Cameron McKenna Nabarro Olswang secured a role as counsel to Aquila Energy Efficiency Trust in its Main Market listing, and ActiveOps IPO as part of a team in its admission to AIM. The firm secured four instructions in H1 overall, having also advised the financial advisers in two high-profile AIM deals, namely the listing by Arecor Therapeutics plc, and as adviser to Peel Hunt LLP and Shore Capital Stockbrokers Limited in the £208m market debut of consumer goods reseller Music Magpie. Alasdair Steele, partner in the CMS London Corporate Team and Head of Equity Capital Markets, noted the increased deal flow since the £5.4bn listing of the Hut Group in September 2020, commenting:
‘The Hut Group IPO in the second half of 2020 fired the starting gun for the launch of more IPOs than the market has seen in years. A combination of investors with ever increasing amounts to invest and an expected post-COVID and post-Brexit bounce has given investors a renewed appetite for IPOs, though while it has been a busy market, investors have been discerning in the IPOs they support and pricing. The pipeline for the remainder of the year and into 2022 looks to continue to be strong though we can expect to see slowdowns over summer and through the Christmas period as investors pause for breath.’
Druces has been active in assisting companies keen to pursue a standard listing on the Main Market. In the first half of 2021 the firm has represented both energy company Sloane Developments Ltd (renamed MAST Energy Developments Ltd), and mining specialists Caerus Mineral Resources plc, on their induction to the London Stock Exchange. Memery Crystal was at the forefront of the medicinal cannabis IPOs, acting for MGC Pharma in the first cannabis sector listing on the Main Market of the LSE. The company also advised US issuer TinyBuild on its admission to AIM. Fladgate also capitalised on the opportunity for medicinal cannabis companies to go public, acting for cannabinoid company Cellular Goods on its heavily oversubscribed IPO on the standard segment of the Main Market. In addition, the company saw Silver Bullet Data Services Group admitted to trading on AIM at the end of June. Locke Lord advised on two AIM transactions, notably the listing of hospitality investment business, Nightcap at the beginning of 2021.
Firms most frequently instructed as legal adviser to the financial adviser/underwriter in H1 2021 (Main Market and AIM)
Competition for legal advisory roles to the financial adviser in Main Market transactions has been similarly fierce, with Linklaters leading the way in advising the underwriters on some of the most headline-worthy, high-value transactions this year to date, including the £1.2bn listing of Moonpig, the £1.1bn listing of Trustpilot, and the highly oversubscribed Dr Martens IPO, which was valued at £3.7bn at the offer price, but saw a 15% jump in value on admission. In addition to advising the big-ticket deals on the financial adviser side, the Linklaters team also acted for chip designer Alphawave IP in the largest ever listing of a North American company in London, which debuted on the Main Market of the LSE at £3.1bn. James Wootton, a partner in the Linklaters corporate team that acted on these transactions, acknowledged that the H1 surge in activity could be attributed in part to London maintaining a competitive position by effectively evolving in response to market appetite. He commented:
‘The story of the UK IPO market in the first half of 2021 has been one of extraordinary levels of activity. London has continued to demonstrate its attractiveness as a premier global listing venue. In particular, the UK has followed the mood music set by Lord Hill’s review in showing a willingness to innovate to establish itself as a hub for Tech and Tech-related businesses. We have seen a number of unique and bespoke structures, including dual-class voting, golden shares, exchangeable share structures and preparations for Europe’s first Tech direct listing. Momentum continues to be strong, and we look forward to a continued flow of high profile deals in H2.’
Latham & Watkins acted as the English and US legal advisers to the Joint Global Co-ordinators and Joint Bookrunners on the largest and most talked about deal of the year so far, Deliveroo’s £8.2bn standard listing on the Main Market. The firm also acted for the underwriters on the listing of furniture specialists Made.com in a £775m admission to the Main Market. The global law firm acted for cyber security specialist Darktrace in its high-profile and very successful £1.7bn premium listed IPO, the team being led by London corporate partner James Inness. Chris Horton, another London corporate partner, led the firm’s teams on the Deliveroo and Made.com IPOs and commented:
‘The London IPO market has not felt so busy since 2014; it’s very pleasing to see so many companies coming to the London market, particularly in the technology sector, which plays to our strengths as a firm. The second half of the year has a good pipeline of IPOs, including SPACs looking to take advantage of the planned new Listing Rules; the mood around London IPOs, and potentially reforming our rules further, around things like prospectuses, is very positive. It’s a global market place for IPOs and it is good to see London upping its game.’
Pinsent Masons have acted as legal adviser in four of the 23 AIM IPOs in the first half of the year, representing a wide range of clients across a diverse sector base, including Zeus Capital and Joh. Berenberg, Gossler & Co. in the £340.6m IPO of Tiny Build plc, a leading video game publisher and developer primarily focused on premium AA and premium indie games. Gareth Jones, corporate finance partner at Pinsent Masons says:
‘The IPO of tinyBuild Inc., a leading video games publisher and developer with global operations, was the largest North American IPO on AIM and only the third US Category 3 issuer that has utilised an electronic settlement service in its shares through CREST. Since closing that deal we have had a number of in-bound enquiries from other US companies keen to hear more about AIM and the complications of being a Cat 3 issuer.’
In addition, the team at Pinsents acted for Liberum in In the Style Group plc’s IPO, Investec in the £119.8m IPO for Active Ops, and Nplus1 Singer Advisory LLP in the listing of The Artisanal Spirits Company plc. Although outside the scope of our data, it is notable that Pinsents were also involved in the IPO of Mailbox REIT plc, advising WH Ireland Limited as IPSX lead adviser and bookrunner. Mailbox is the first company to be admitted to trading on IPSX, the new Stock Exchange regulated by the FCA and the world’s first such exchange dedicated to the initial public offering and secondary market trading of companies owning single institutional grade real estate assets and multiple assets with commonality.
BDB Pitmans have also been active on AIM, acting for Arden Partners on Glantus Holdings’ IPO and Strand Hanson in the Silver Bullet Data Services IPO, as well as advising issuer Trellus Health in its £65m admission to AIM. Meanwhile, Fieldfisher claimed a spot advising financial advisers Tennyson Securities and Novum Securities Limited in the Main Market IPO by Cellular Goods, and Panmure Gordon in Dianomi’s £83m flotation on AIM, in addition to a role advising Canadian mining company Cornish Metals on its AIM admission.
Herbert Smith Freehills represented the financial advisers in the £243m VH Global Sustainable Energy Opportunities IPO and also acted for PensionBee Limited in its admission to the High Growth Segment of the Main Market of the LSE in a deal that comprised an offer to both institutional investors and eligible customers of PensionBee. Ashurst closed two transactions at the beginning of the year, acting for the financial advisers in the Auction Technology Group and the Foresight Group Holdings IPOs. Stephenson Harwood acted for the financial advisers in the Main Market listings of both Literacy Capital and Aquila Energy Efficiency Trust and Haynes and Boone CDG acted for the financial advisers in both the AMTE Power and Cornish Metals IPOs.
Deals in excess of £1 billion – H1 2021
Outlook for H2 2021
In addition to the 47 transactions admitted to trading in the first half of the year, Market Tracker notes a considerable pipeline of transactions set for admission in H2 2021, with over 20 IPOs announced since the beginning of the year yet to be admitted to trading. Nicholas Holmes, who heads up Ashurst’s equity capital markets practice, commented:
‘Having closed two London IPOs in H2 2020 (Ignitis Group and Bytes Technology) we were delighted to maintain our place at the forefront of the London IPO market with a further two listings in H1 2021 (Foresight and Auction Technology Group). Our pipeline continues to look very strong and we are expecting to launch a number of further IPOs in the coming months.’
Amid significant investor appetite for new listings, the outlook for H2 looks promising. Nevertheless, Julian Stanier, head of Corporate Finance at Pinsent Masons acknowledges that the situation is unlikely to be sustainable for a prolonged period:
‘This has been the busiest period for UK IPOs for 15 years. After a long period of uncertainty around Brexit and the pandemic, we have seen a resurgence of IPO activity throughout H1 2021. Companies have been eager to exploit the renewed investor optimism. The number of new listings on the London Stock Exchange in H1 2021 already exceeds the number that listed in the whole of 2020. We have a strong pipeline for H2 and a number of issuers keen to get out as early as possible after the summer holidays. However, not every company queuing up will achieve a listing; although investor appetite has remained strong throughout H1 there are some signs of deal fatigue. We are hearing stories that fund managers are tired from too many roadshow meetings. With the much-anticipated end of lockdown a few weeks away and summer holidays around the corner, there is likely to be a decline in activity in the weeks to come, but, markets permitting, H2 looks as if it could continue in a similar vein.’
A full breakdown of all the IPOs to take place on the Main Market and AIM of the London Stock Exchange can be found on the Lexis®PSL Corporate Market Tracker database, which is a unique service for corporate lawyers. Key features include a transaction data analysis tool for accessing, analysing and comparing the specific features of various listed company transactions including takeovers, initial public offerings and secondary offers; detailed, searchable summaries of listed company deals and AGMs; and a comprehensive and searchable library of deal documentation such as announcements, circulars, offer documents and prospectuses (a subscription to Lexis®PSL Corporate is required).
Market Tracker will also review these transactions in more detail in our upcoming Equity Capital Markets H1 2021 review, which looks at specific deal features and gives a comparative overview of market activity.
Firms acting on more than one IPO in H1 2021
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Market Tracker is a unique service for corporate lawyers housed within Lexis®PSL Corporate. It features a powerful transaction data analysis tool for accessing, analysing and comparing the specific features of corporate transactions, with a comprehensive and searchable library of deal documentation across 14 different deal types. The Market Tracker product also includes news and analysis of key corporate deals and activity and in-depth analysis of recent trends in corporate transactions.
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