IPO proceeds on London stock market fell 36% yoy in Q3 2023

• IPO activity on the UK main market and AIM in Q3 2023 saw five listings in total, raising just under £360m
• Global IPO activity proceeds fell 32% year-on-year in Q3 2023
• Despite subdued activity levels, the long-term outlook appears more positive, with a rebound expected in 2024

The London stock market saw just five listings, raising £359.8m, in the third quarter of 2023 as challenging market conditions continued to dampen IPO activity. 

During the quarter, proceeds fell by 36% when compared to the same period in Q3 2022 when eight issuers raised £565.5m. Over the first three quarters of 2023, 23 companies listed in the UK, raising £953m, compared with 34 IPOs raising £1.16bn over the same period in 2022.

Of the five IPOs in Q3 2023, the main market listed two IPOs which raised £346.5m in total, whilst the Alternative Investment Market (AIM) saw three admissions raising £13.3m. The largest in the period was the CAB Payments IPO which raised £291.5m.

Scott McCubbin, EY UKI IPO Leader, comments: “Challenging market conditions, compounded by high inflation and rising interest rates, have meant IPO activity has continued to face obstacles. However, there are reasons to be positive – several companies which had delayed their IPOs earlier this year are now making plans to be ‘IPO ready’ for when headwinds ease. Furthermore, there is an uptick in activity in the US IPO market, which normally has a positive knock-on impact in other markets, so we anticipate a rebound in activity in 2024.

“Despite subdued activity levels, London still has the fundamentals required to be an attractive global destination to list, including an exceptionally strong financial advisory sector, a well-regulated stock exchange and a liquid investor base.

"The FCA’s review into simplifying the listings regime to help make London a more appealing destination for a wider range of companies is a welcome step, however it is important that we strike the right balance between reducing red tape while continuing to safeguard protections for investors and other stakeholders."

Global IPO activity fell but market momentum is building

Globally, the first three quarters of 2023 recorded 968 IPOs with US$101.2b capital raised, a 5% and 32% decrease year-on-year (YOY), respectively. Despite this, market momentum is building, with Q3 witnessing a notable improvement in post-IPO share price performance compared with previous quarters.

The Americas region has seen a strong 2023 so far, with a 159% increase in proceeds, raising US$19.3b, YOY for the initial three quarters of 2023, however it’s been a mixed picture for Asia-Pacific IPOs, with volume and proceeds down YOY by 8% and 41%, respectively, despite the region representing approximately 60% share of global market share. The EMEIA region saw 286 IPOs, which raised US$21.9b, a YOY increase of 2% in volume but a 44% reduction in proceeds.

The technology sector continues to dominate global IPO activity in 2023 in terms of proceeds, however, if excluding the blockbuster chip designer IPO, the entire sector would register a decline in proceeds. Industrials moved into the second position amid solid expansion across most of its subsectors. 

Debbie O’Hanlon, EY UKI Private Leader, said: “Tighter liquidity and the rising cost of capital means investors are turning their attention to companies with strong fundamentals including a robust balance sheet and healthy cash flow. It is vital that IPO candidates are agile with business models and can demonstrate financial health and the potential for value creation. An understanding of ESG concepts and the ability to embrace new technologies will also be important to safeguard their business post-IPO.”