Brokers today postponed two smallcap stock market flotations totalling £300 million in what some saw as a sign of indigestion among investors from the surging number of IPOs this year.
Elcogen, a fuel cell company, was planning to float with a stock market value of up to £200 million but has called a delay, while Cornish mining company Tungsten West put off its £100 million flotation until September.
One fund manager said appetite among investors for new share issues was beginning to wane after a flurry of companies coming to the market since the worst days of the pandemic ended.
In the first quarter of this year, London saw its strongest IPO start to the year since 2007, with 20 floats raising £5.6 billion - more than half of the £9.4 billion raised in the whole of 2020.
Private equity-backed floats in particular have been strong after a drought during Covid, with owners looking to cash in on the surging stock market.
If the IPO market does begin to cool, it could be a signal of a cooling of the global boom in share prices.
One fund manager who has taken part in several IPOs this year but is now holding back said: “I just don’t understand where all this new money has been coming from.”
One broker working on IPOs this year said it was wise to pause for a few months before pushing the button on new floats to allow investors to digest the recent flurry.
Elcogen said it had postponed its float “given current market conditions and sector volatility.”
It would now also consider other options including another round of private investment before an IPO.
One veteran fund manager told the Standard that, in times of booming IPO markets, new investors make more profit from backing the earlier floats than the later ones as valuations rise over the months.