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This Market Tracker trend report reviews IPO and secondary offering activity over a three-year period, and provides insight into current hot topics, legal and regulatory developments, and what we and our contributors expect to see in 2021 and beyond.
The Market Tracker trend report examines the current dynamics of equity capital market (ECM) activity within the United Kingdom in respect of transactions during 2020, using 2018 and 2019 for comparative purposes. It reviews a total of 597 transactions on the London Markets: 174 initial public offers (IPOs) and 423 secondary offers. The report provides analysis and commentary on current and emerging trends in this area and includes insight into what we might expect to see in 2021 and beyond.
Topics covered include:
Main Market IPOs
Despite a slow start to the year as Brexit-related investor cautiousness combined with the impact of the
coronavirus (COVID-19) pandemic, Main Market IPO activity increased by 27% on the previous year. Two-thirds of
the year’s deal activity took place during Q4 as the markets bounced back after months of pent-up demand, an
increased level of activity which has continued into Q1 2021. As in previous years, the investment sector continued
to dominate Main Market IPO activity. The difficult market conditions seen in 2020 did not deter international
businesses from listing in London.
AIM bounced back from a low point in 2019, with transaction volume increasing by 60% in 2020. The
junior market attracted a larger proportion of smaller companies during 2020, with no companies valued at over
£200m admitted to trading. Healthcare was the most popular sector in 2020 for AIM IPO deal volume, accounting for
four companies overall.
The global pandemic resulted in a significant increase in secondary offerings during 2020, with overall
deal volume up by 87% on 2019. Aggregate gross proceeds raised on the Main Market increased by 204%, and by
88% on AIM. The Travel, Leisure, Hospitality & Tourism sector accounted for 22% of all secondary offerings and
25% of all funds raised. There was a clear correlation between the two ‘waves’ of the COVID-19 pandemic and the
aggregate gross proceeds raised on the London markets. Rights issues, traditionally associated with raising
finance in challenging conditions, experienced a resurgence after a quiet spell in 2019, which saw only two rights
issues complete. Nevertheless, placings continued to be the most popular transaction structure, making up 80% of
all Main Market secondary offerings in 2020.
Standard listings have slowly increased in popularity over the past few years, and in 2020, 66% of
companies listing on the Official List by way of IPO, introduction or transfer from AIM, opted for a listing on the
standard listing segment as opposed to the premium listing segment. It is notable that the largest IPO of 2020 by
market capitalisation, The Hut Group plc, (£5.8bn) opted for a standard listing. The number of special purpose
acquisition companies (SPACs) listing on the standard segment of the Official List doubled from four in 2019 to
eight in 2020.
Legal & regulatory developments
Several important legal and regulatory developments in the sphere of UK equity capital markets took
place during this period as the government and regulators tackled Brexit and the COVID-19 crisis and sought to
make the UK public markets more attractive to companies. Key developments include:
Brexit-related changes, which came into effect at the end of the implementation
period as the Prospectus Regulation and the Market Abuse Regulation were onshored.
the launch of the UK Listing Review by the government, which was followed by Lord
Hill publishing wide-ranging recommendations in March 2021, many of which are expected to be taken forward with consultations throughout 2021
the introduction by the FCA of mandatory climate-related disclosure requirements
for commercial companies with a premium listing and the government consultation on extending the
requirement to a wider set of entities, including listed and AIM UK companies with more than 500 employees
The report contains expert commentary from:
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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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