London leads Europe in follow-on fundraising in a decade

In the six months to June, existing issuers dominated the market raising funds via a range of placings, rights issues and other transactions in a bid to shore up their balance sheets

While London markets may have faced a lull in new placings, they had their busiest half for follow-on fundraising in a decade.

Data from accountancy firm EY shows more than £21bn of funds were raised in the first and second quarters in London.

In the six months to June, existing issuers dominated the market raising funds via a range of placings, rights issues and other transactions in a bid to shore up their balance sheets.

Of all the funds amassed in Europe in the second quarter, 40 per cent was raised in London. In a combined measure of IPO and follow-on activity since the start of the year, London came behind only NYSE and the Nasdaq, and Hong Kong.

Scott McCubbin, EY’s UK & Ireland IPO Leader, said: Whilst IPO activity has been almost extinguished by COVID-19, in what is historically the busiest quarter of the year, the markets were focussed on supporting fundraising by existing issuers to shore-up finances to mitigate the impact of the pandemic.

There has been just one float in the main market this year – Blackfinch Spring VCT, which raised around £3m in the second quarter. Shanghai-listed China Pacific Insurance Group also raised £1.44bn by listing Global Depositary Receipts (GDR) in London, the second listing raised under the London Shanghai Stock Connect programme.

Although some IPOs have been shelved, firms seem more optimistic for a float in the latter half of the year. The volatility seen in March has calmed somewhat and stock prices and valuations have recovered. As such deals that were postponed until 2021 are now being considered for the second half of 2020.

Helen Pratten, Strategy & Transactions Partner said: A further rebound of IPO activity is expected in H2 2020, on the back of strong June global IPO performance. However, uncertainties continue to be present. A possible second wave of COVID-19, US-China tension, Brexit negotiations, the US election and low oil prices could derail some of the positive global momentum we began to see in June.