Talk of IPO indigestion amid fears second half of 2021 may struggle to keep pace with a record start to the year.
More money has been raised by IPOs this year than in all of 2018 and 2019, but concerns about investor fatigue look to be mounting after a lacklustre start to life for Made.com today.
The home furniture business was priced at the bottom of its predicted range before falling at the opening bell in deals involving City institutions. Its performance adds to talk of IPO indigestion after fuel cell company Elcogen and Cornish mining firm Tungsten West delayed their debuts.
There's been a flurry of new issues so far this year, with Deliveroo (LSE:ROO), Trustpilot Group (LSE:TRST), Dr. Martens (LSE:DOCS), Moonpig (LSE:MOON), Darktrace (LSE:DARK) and PensionBee (LSE:PBEE) among high profile names making debuts.
The majority of these newcomers have got off to fast starts as investors with cash piles to deploy after the pandemic rushed to get involved at a time of low interest rates. Liberum said the IPO proceeds of £7.5 billion in the first five months of this year was neck and neck with 2011, which is the best IPO year this century in the UK.
Its research earlier this month found an average return of 20.1% on the class of 2021 IPOs. The broker added: “We expect the IPO boom to continue and additional attractive IPOs to come to market in the second half of 2021.”
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These are early days of course, but the initial flurry of excitement has faded somewhat after the Deliveroo flop and a disappointing start to trading for semiconductor firm Alphawave IP (LSE:AWE)
The Cambridge-based company, whose chip technology enables data to travel faster and more reliably using lower power, was initially valued at £3.1 billion after shares were priced at 410p. They today stood at 325p, despite this week's boost of design wins from 5G wireless customers in North America during its best-ever first half performance.
Sentiment has also cooled towards THG (LSE:THG) since the Hut Group business soared in value in the three months following London's biggest flotation in five years last September. The stock has fallen 25% since January, which is another factor why fellow e-commerce business Made.com may have found it harder to get out of the starting blocks this week.
Bookrunners working on the Made float had been eyeing a range of between 200p and 265p for the shares, which would have the valued the business at as much as £1 billion.
But this morning's announcement revealed an opening price of 200p for a market capitalisation of £775.3 million, raising £100 million for the company in the process. Having started trading under the MADE ticker at 8am, the shares were changing hands at 183p by lunchtime.
Unconditional dealings, when retail investors usually get involved, starts on Monday.
The business, which is popular with millennial and Gen Z shoppers, sells 6,000 furniture and homeware products in the UK and seven European countries. It generated £315 million of sales last year but the rate of revenues growth has accelerated at the start of 2021 to 63% as losses for its most recent quarter narrowed to £1.8 million.
The group's data-led technology platform results in a “just-in-time” supply chain that uses predictive modelling, meaning 59% of products are pre-sold on arrival at its warehouses.
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