Investors put off flotations as shares fall

BRITISH investors are being put off stock market flotations due to the miserable performance of groups such as Funding Circle and Uber as listed companies, according to financial technology firm Nexthash.

Researchers found 24 per cent of Britons said that seeing the likes of both companies and other “unicorns”, start-ups valued at $1 billion (£827 million), struggle has made backing flotations or initial public offerings (IPOS) “unpalatable”.

It also found that 68 per cent of investors would only be prepared to trade or invest where there is security or protection against fraud.

Last Thursday, Funding Circle, one of the most high profile British unicorns to hold an IPO, said that its interim pre-tax losses had widened by 13.6 per cent to £30.8 million.

It also said that more of its loans were going bad due to the deteriorating environment and that demand is weak. Funding Circle, which arranges peer-to-peer loans, for small firms floated at the end of September with a £1.5 billion valuation.

However the shares have plummeted since then, and it is now worth just £368.1 million. Uber, a food delivery and taxi company, also posted disastrous results on Thursday.

It reported a second quarter loss of £4.5 billion and failed to hit revenue targets, which sent its shares down.

Over the last 20 years, Uk-based entrepreneurs have built 72 companies that have unicorn status. That compares to 29 in Germany. One of the most disappointing IPOS is Aston Martin. The luxury car group floated last October at £18.10 a share, which valued the firm at £4 billion. Since then its share price has fallen to 515p.