IPO schedule for 2020 just got interesting

by Graeme Evans from interactive investor |

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Hopes for a revival of London's IPO market have been boosted by these big names on Wall Street.

Hopes for a revival in London IPOs following a three-month hiatus have been boosted by the Wall Street debut of Warner Music Group (NASDAQ:WMG) and pricing of ZoomInfo Technologies  shares.

This week's surge in activity in the United States could mark the opening of the floodgates for those new issues put on hold by the market turmoil caused by the Covid-19 pandemic.

Biotech company Pliant Technologies also priced its IPO this week, while video games graphic designer Unity Technologies and online used car seller Vroom are potential new arrivals.

The improved market conditions and resumption of activity on Wall Street may trigger the thawing of London's IPO market, which has been frozen since February's market debut for smart meter company Calisen Group (LSE:CLSN).

That £1.3 billion listing, which was the largest since last year's arrival of Trainline (LSE:TRN), has performed pretty well given the circumstances. It debuted at 240p and dipped as low as 111p during the market turmoil, before recovering to just below 200p for a place in the FTSE 250 index when the next reshuffle takes place later this month.

Some of the names consistently touted as potential IPO candidates have either been hobbled by the pandemic or affected by the threat of a no-deal Brexit, most notably Jaguar Land Rover. It's also unlikely that long-awaited listings for the likes of O2 and Deliveroo will be risked.

Walmart (NYSE:WMT) has also cooled last year's speculation about a potential stock market listing for supermarket Asda, with its efforts now focused on selling a stake in the UK business. An IPO for Asda looks to be more of a longer-term goal.

Cambridge-based cyber security Darktrace is one potential candidate to look out for in the coming months, while the ongoing tensions between Washington and Beijing mean Chinese companies are increasingly likely to use London as a place to raise fresh funds.

For now, investment bankers in the City have been focused on helping companies to survive the current storm. The placing of new shares by existing UK-listed firms has raised an estimated £7 billion in a matter of weeks, as bosses look to shore up balance sheets or secure the firepower to take advantage of new opportunities in a distressed market.

Catering giant Compass (LSE:CPG) secured £2 billion from its fundraising last month, with WH Smith (LSE:SMWH) and Ted Baker (LSE:TED) among others to have sought the support of institutional investors. This trend has angered some shareholders, who have seen their stakes diluted by accelerated share placings.

 Wednesday's return of Warner Music Group to the public markets after an absence of nine years was marked with an immediate 20% jump for shares to above US$30, valuing the world's third-largest recording label at over $15 billion.

ZoomInfo, the business intelligence platform backed by Carlyle Group, will also be valued at just over $8 billion after it priced its upcoming IPO at a higher-than-expected $21 a share.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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