Some waves take a while to arrive. Rewind to February and the London Stock Exchange chief, Julia Hoggett, was telling everyone to brace for a deluge of UK floats.
Maybe surfing’s not her thing because the wave has turned out to be a ripple. Far from hanging ten (or more), the UK has seen just four IPOs where the size of the offer topped £30 million. First, February’s listing of the Kazakhstan airline, Air Astana, which was basically a ploy for BAE Systems, its 49 per cent owner, to sell down its stake — and where the global depositary receipts listed here are now down 28 per cent.
Then, June’s double act of Advanced Oxygen Therapy Inc and Raspberry Pi: the flatlining former outfit bringing useful woundcare tech to London’s investors, while the latter has at least proved nice and fruity so far, up from 280p to 403.4p.
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Making up the quartet? July’s cash-shell, Rosebank Industries: the comeback vehicle of the “buy, sell, improve” merchants from Melrose, where the IPO bounce from 250p to 780p says more about their fan club than the London market.
And that, so far, is the full Hoggett: an average deal size of £135 million, according to Peel Hunt maths. And the newcomers don’t begin to make up for business going the other way: Flutter Entertainment, say, making its primary listing New York or the likely exit of Britvic, Spirent and Hargreaves Lansdown, all the subject of agreed bids. True, a £50 billion IPO of Shein, the fast-fashion retailer, could compensate a bit but only if the UK is happy to see the arrival in the FTSE 100 of an opaque Chinese-founded company that the US doesn’t want.
Anyway, Britain’s answer to all this? To Wild West things up, US-style, with the biggest relaxation of the listing rules in 30 years: a move backed by the Financial Conduct Authority, the stock exchange and Rachel Reeves, the chancellor. But who knows if sacrificing Britain’s reputation for good governance will have the desired effect? Isn’t there a risk it backfires? As one banker puts it: “The new rules are basically, ‘do anything you like and if investors don’t like it, they can sell the shares.’ ”
Two big changes have now come in. First, in an attempt to lure tech founders, the UK has axed “premium” and “standard” listings, allowing dual-class shares into the stock market indexes: the sort of thing that would have put the bombed-out THG and Deliveroo straight into your FTSE 100 tracker fund. On top, their pre-IPO mates (or founder investors) will be able to keep their dual-class rights for ten years, making new investors very much second-class citizens.
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Second, there’s no longer a requirement to put related-party deals to a shareholder vote. So when an owner (Teddy Sagi-style at Playtech, say) routinely sells his own companies to a business, the deals only have to be vetted by what may well be a patsy board and receive a “fair and reasonable” opinion from a conflicted adviser coining it in fees.
It takes two to tango, though. Hence the key question: how will any of this make a floating company any more attractive? Investors were burnt enough under the old rules by the likes of Dr Martens, Moonpig and Made.com. And now they face what Deutsche Bank analysts call “more of a ‘buyer beware’ culture”.
Why, then, will investors take on the hassle of sussing out an IPO where they have limited rights in preference to buying a cheapish-looking stock they know? No doubt Hoggett’s big wave will bring the answer. And if the rumour mill is right, it could even throw up the likes of Boots, Klarna and Starling Bank. If it ever arrives, of course.
Mobico picks up
Amazing what a set of half-year results can do. Barely had those from Mobico, the artist formerly known as National Express, pulled in, than the shares shot up.
How come? Relief, apparently. First, that investors actually had some figures to look at, what with last time’s full-year results turning up even later than the buses: twice delayed to give the auditor, Deloitte, more time to give Mobico’s German rail wing a proper ride. And, second, because the latest figures weren’t another profits warning — even if adjusted operating profits, up 24 per cent to £71.2 million, were “slightly below” the expectations of the transport experts at Peel Hunt.
Whatever, it was enough to see the shares race up 17.7 per cent to 68.35p, with the market also hopeful that Ignacio Garat, its chief executive, may finally have a route out of the group’s £1.2 billion net debt problem. Mobico’s US yellow school bus business, with sales of £609 million and £21.4 million profits last half, is now formally up for sale. And, while analysts have a mind-the-gap range on what it’s worth — £200 million to £700 million — at least Garat’s timing looks smart. The sale follows a “strong bidding season” where routes won “exceeded” those lost “for the first time in over a decade”.
Mobico has been hauling around a ton of loans since Covid stopped people travelling, with its £988 million net debt on which bank covenants are tested more than twice its £420 million market cap. Cut that and its forecast £90 million interest bill this year and investors may even switch focus to Alsa: Mobico’s quality Spanish business fresh from a record first half. Still, let’s not get ahead of ourselves yet.
Bitcoin meltdown
So much for bitcoin being digital gold. The shiny stuff is hitting fresh highs — $2,531 per troy ounce — on expectations of US interest rate cuts and a lower dollar. What, though, of crypto, the famous hedge against fiat currencies? Well, on recent form, bitcoin is struggling to break through $60,000, let alone the $73,462.59 high in March. Bitcoin doesn’t look so pretty, either, melted down into jewellery.
