Companies poised to float despite fear of Brexit buffeting

● Latest EY report reveals 17 IPOS during first quarter, three more than a year ago

The stock market may see a flurry of flotations during the Brexit negotiations and Scottish businesses are likely to be involved, experts said today.

The UK market for initial public offerings (IPOS) saw a “slow but steady start” to the year as a result of some companies waiting on the sidelines for more clarity around the triggering of Article 50 and President Trump’s victory in the US, according to the latest EY IPO Eye report.

However, there was an upturn in activity as the first quarter came to an end, the study noted. As a result, there were 17 IPOS during the opening three months of 2017, three more than the same period in 2016, though raising 25 per cent less capital than a year earlier.

According to the accountancy giant, this is largely due to the low level of businesses outside of investment funds looking to list.

EY said the ongoing volatility of the pound and continued uncertainty around the UK’S exit from the EU are expected to push back further IPO activity to the end of the year. But experts said flotations were expected to maintain a steady flow during the next 18 months to two years.

Miketimmins,ey’sipoleader in Scotland, said: “Activity in the IPO market continues to be impacted by currency volatility and political uncertainty, in particular on main market listings outside of the investment industry.

“With a two-year window permitted in the Article 50 process, while negotiations take place, and a potential second referendum on Scotland’s independence unlikely before autumn 2018 at the very earliest, we may witness companies speed up decisions within this timeframe.

“There is the expectation that a number of companies across the UK will list within this period in order to take advantage of the European passporting regulations as well as the greater access to European investors. There is a strong pipeline of Scottish companies with the potential to IPO and greater confidence in the market could drive more activity during the next 18 months to two years.”

Today’s IPO Eye report reveals that on the main London market there were 12 flotations in the quarter, that raised some £1.1 billion collectively, with the largest by Ocelot Partners, a non-equity investment vehicle.

Financial services, funds and investment vehicles dominated the main market with only three of the 12 listings coming from other sectors.

The junior Alternative Investment Market, meanwhile, saw five admissions that raised £99 million with GBGI, a provider of international benefits insurance, being the largest.

Two of the IPOS recorded in this quarter were private equity-backed and accounted for 23 per cent of the capital raised.

Newly listed stocks in Q1 2017 have outperformed veteran assets, which are currently trading an average of 17 per cent above list price.