About two thirds were in finance or tech and media, but growth came across the board. London’s main market had its most listings in four years, whilst IPOs on the junior market AIM surged from 16 in 2020 to 55 in 2021. The challenger Aquis Exchange also saw more companies join its market than in 2019 and 2020 combined. The boom was driven by pent-up demand built during the pandemic.
But bigger doesn’t always mean better. Some of the most famous names are ending the year a significant distance away from their float price.
The most high-profile London float of 2021 was food delivery app Deliveroo. It was the year’s largest IPO — raising £1.5 billion and opening with a market capitalisation of £4.9 billion at the end of March — and one of the biggest flops. It delivered a stone cold takeaway for investors, with shares slumping 26% on their first day of trading and still languishing 45% below the 390p offer price.
“Deliveroo is on the speculative, high growth end and that has become less of an investor favourite,” says Neil Wilson, chief analyst at Markets.com. “If [it] can’t make money in a pandemic with everyone locked down, how’s it going to in future?”
Still, Deliveroo wasn’t the most unpalatable dish served up on the stock market this year: the very worst of 2021’s IPOs was Parsley Box, a Scottish OAP-focused meal delivery firm whose £2.39 minced beef hotpots failed to whet investors’ appetites. Its shares listed at 200p in March but are now down 77%.
Other big consumer names to suffer a turgid first year on the stock market including: fast fashion retailer In The Style (down 54% since its March IPO); online bathroom-seller Victorian Plumbing (down 60% since June): and furniture firm Made.com (34% lower since June).
“You had a lot of companies coming to market post the 2020 recovery with some very rich valuations, particularly those in the ‘pandemic winner’ category,” Wilson says. “2021 has shown those prices were probably never justified and inflated by the pandemic and the vast liquidity we had as a result of fiscal and monetary easing.”
Shares in AI firm Darktrace initially soared, helping it into the FTSE 100, but have promptly sank since then. It has now been relegated from the topflight index but is up 59% on its April IPO.
Susannah Streeter, senior investment analyst at Hargreaves Lansdown, said: “There could be comeback on the cards as there is growing demand for sophisticated technology to counter the growing armies of cyber criminals. The ongoing shift to digital is likely to keep opening up new opportunities and markets for Darktrace as firms scale up their operations to meet demand, whilst trying to ensure their systems stay secure.’’
The year’s best IPO is one you probably missed: Acceler8 Ventures, an acquisitive shell company aiming to snap up a gaming, media or software firm. The names behind it seem to have appealed to small-time investors: Acceler8 has ended this year up 285% on its July listing price of 100p. It said in September it was “continu[ing] to pursue its investment and acquisition strategy and is currently assessing both domestic and international opportunities.”
AIM-listed Bens Creek Group, which mines metallurgical coal used for steel-making, was another top performer thanks to rising demand for the metal. Shares have more than doubled since its 10p-a-share October listing.
Oxford Nanopore has shot up 63% — and not just because of its of-the-moment work on Covid sequencing and lateral flow tests for the NHS.
“There had been early indications that it would prove to be a highly popular IPO given that the initial offer was oversubscribed,” says Streeter. “The launch was seen as a vote of confidence for the London Stock Exchange as a worthy launch pad for both tech and pharmaceutical companies, particularly given the NASDAQ’s dominance in this space.”
Another success was bar group Nightcap, owner of The London Cocktail Club and co-founded by former Dragons Den star Sarah Willingham. It is up 75% since it listed at 10p a share almost a year ago on 13 January 2021.
London retained its position as the leading European market this year. Total IPO funds raised on the LSE topped £13.9 billion, ahead of Stockholm (£9.4 billion), Amsterdam (£7.2 billion) and Frankfurt (almost £7 billion).
Streeter is cautious: “Appetite is likely to depend on the spread of the new variant and the effectiveness of vaccines. Investors will be in ‘wait and see’ mode, assessing the global economic recovery, which is being hampered by ongoing supply chain issues.”
Russ Mould, investment director at AJ Bell, reckons this year’s IPO boom will trigger more listings in 2022: “The higher the UK market goes and the higher valuations go, the more IPOs you would expect to appear, especially ‘copy-cat’ ones if a particular sector or theme proves particularly hot.”
It will be the first year since the Financial Conduct Authority relaxed of listing rules in a bid to make the capital more attractive to tech firms post-Brexit. Companies will be able to make as little as 10% of their shares public, down from 25%, and founders can retain stronger control of firms.
“If we do get a boom in IPOs [as a result of the relaxation], then investors will need to keep their wits about them, maintain their discipline, ensure quality control and fight the fear of missing out,” Moulds adds.
All price data is correct as of 17 December and was compiled by Hargreaves Lansdown for the Evening Standard.