London’s IPO market is hotting up, it seems, as a football legend gets involved in the next big thing.
David Beckham and fintech entrepreneur Jonathan Rowland boosted London's slender IPO pipeline today with plans to bring esports and bitcoin banking to the stock market.
The intentions to float by Beckham-backed Guild Esports and Rowland's fintech app Mode come a week after The Hut Group fired the starting gun on the UK's biggest IPO in several years.
Their willingness to test investor appetite is an encouraging sign after a year of only 16 UK new issues in London so far. Wall Street, in contrast, has been much busier with the debuts of online car seller Vroom (NASDAQ:VRM) and business intelligence platform ZoomInfo Technologies (NASDAQ:ZI), while plenty of other big names have filed IPO registration documents with US regulators.
As we reported last week, home rental company Airbnb and Silicon Valley start-ups including cloud data platform Snowflake and gaming content specialist Unity are ramping up plans to float. They will be hoping that the recent rout of tech stocks proves short-lived.
The Hut Group is planning to raise £920 million in its flotation later this month, based on a valuation for the Manchester-based consumer brands group of £4.5 billion. The initial offer of shares is being made available to City institutions including BlackRock and Henderson.
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Today's IPO candidates are looking to raise much smaller sums of money, with Guild Esports hoping to secure £20 million and Mode Global Holdings £7.5 million.
Their arrival would certainly bring something different to the London market, particularly in the case of Guild's plans to become one of the world's top 10 esports franchises.
It will use the funds raised from an IPO to recruit players so it can field dedicated teams to compete in Fortnite, CS:Go, Rocket League and FIFA. Revenues will be generated through tournament winnings, digital marketing opportunities, sponsorship, membership, merchandise and promotional tours.
The esports market has grown dramatically, with pandemic lockdowns further helping to attract new gamers and build audiences at a time when mainstream sport was not being played.
The involvement of ex-England captain Beckham, who has a significant minority shareholding, will ensure Guild retains a high profile. Becoming the first esports franchise to join the London stock market will also provide “caché, credibility and capital”, according to the company.
The fundraising by fintech start-up Mode will be used to step up its growth after the launch of an app allowing customers to manage traditional and digital assets in one place.
The business also comprises the recently-launched Bitcoin Jar, alongside payment processing services for UK and European businesses to tap into the Chinese market. Mode is also planning to launch a payments solution powered by open banking that eliminates the need for cards.
Mode is likely to be valued at around £40 million in the IPO, which should take place next month and involve the free float of around 25% of its share capital. Major shareholders including Rowland, who is founder and executive chairman, will be subject to lock-up agreements.
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Rowland was only 24 when his internet investment company Jellyworks joined the London market during the dotcom boom in 2000. Its shares soared from 5p to 50p on the first day of trading, with the business bought six months later.
Rowland believes Mode can benefit from increased demand for online and mobile payments in the wake of Covid-19, as well as tap into the potential of the Chinese market through existing partnerships with WeChat Pay and Alipay.
Rowland said: “Mode's mission is to eliminate the fragmentation and friction that plague today's banking, payment, investment and loyalty industries.”
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