Investing Invest in under-the-radar flotations

It’s not just Deliveroo and Moonpig that are going public: smaller companies are listing their shares too – and they could be better value, writes Sam Benstead

There is a buzz in the City of London – it just cannot be heard in its deserted streets. Instead, the chatter and excitement are coming from home offices as bankers plan a bumper year for stock market listings.

With Brexit resolved, the end of the pandemic in sight and a technology boom accelerated by the need to live most of our lives online, companies are looking to list their shares on the London Stock Exchange in a wave of fundraising.

Analysts expect more than £10bn to be raised in flotations this year, three times last year’s £3.2bn. Investing in newly listed companies has paid off: shares in firms that have floated since the start of 2020 have risen by an average of 12pc on their stock market debut, according to AJ Bell, the stockbroker.

Some household names have already listed, such as Moonpig, the online greetings card retailer, and Dr

‘Smaller firms still benefit from the same themes as the big floats, such as technology’

Martens, the shoe company. Deliveroo is putting the finishing touches on a float that could value the takeaway app at £9bn, while shares in Trustpilot surged this week following the review website’s £1.1bn flotation.

But in this big year for floats it is the smaller companies listing their shares that could actually be smarter investments because they do not come with as much hype.

Oliver Brown, manager of the MFM UK Primary Opportunities fund, which specialises in investing in companies when they raise money, said he was seeing more potential in firms that may have flown under the radar.

“There is more value in smaller firms. They can deliver better longerterm returns because the starting prices are lower and they still benefit from the same themes as the big floats, such as technology and subscription models,” he said.

Mr Brown likes ActiveOps, a workforce software management company that is preparing to float. “It basically tells a company which of its employees are being productive and where bottlenecks are being caused – this is particularly useful with more remote working,” he said.

He bought into battery storage company Amte Power, which was admitted to the Alternative Investment Market, London’s junior exchange, this month.

“Fuel cells are flavour of the month,” he said. “But it doesn’t make any money yet, so it should only be a small mall part of any portfolio.”

A safer investment, according ording to Mr Brown, was computer games mes developer TinyBuild, which joined ined Aim this month at a £340m valuation. uation. He said it was growing fast but the shares were still cheap.

“Revenues are growing g by 54pc a year as it has benefited from people staying at home and playing computer games. It makes w d