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The COVID-19 pandemic and Brexit continued to have a significant impact on equity capital markets in 2022, while Russia’s invasion of Ukraine sent shock waves around the world and, aside from the humanitarian crisis, created uncertainty which restrained investor activity in 2022. 

IPOs and Secondary Offerings

Initial Public Offerings (IPOs) declined by roughly 62% in 2022 compared to 2021, according to Market Tracker data. The London Stock Exchange (LSE) reported that during 2022 the aggregate opening market capitalisation for IPOs to date totalled approximately £3.7bn, compared to £53.9bn in 2021. In a similar vein, compared to 2021, the volume of secondary offerings decreased by approximately 64%. Despite this, a robust secondary fundraising market indicates that many companies continue to take value from the London Stock Exchange, and a few companies saw big-ticket secondary offerings in 2022, with Aston Martin Lagonda Global Holdings plc and Ocado Group plc leading the way with fundraisings of £537.59m and £472.66m, respectively.

With the EU unveiling its plans to cut gas imports from Russia by two-thirds in the coming year, energy companies have benefitted from an increased market share. A recent surge in share buyback activity illustrates the favourable position many companies operating in this sector finds themselves in, with Energy & Utilities companies accounting for 13.2% of all share buybacks in the past 12 months. North Sea oil and gas production company, , announced its intention to join the premium segment of the London Stock Exchange market in October 2022 and was admitted to trading on 9 November 2022. The company’s expected market capitalisation is of £2.51bn.

FTSE data

2022 has also seen the greatest number of changes to the FTSE 100 since 2009, during which the market was still grappling with the aftershocks of the 2008 financial crisis.  The economic ripples of Russia’s invasion of Ukraine have been felt as far afield as the FTSE 350. In the first quarter of the year, British manufacturing and mining company Evraz plc (Evraz), which operates primarily in Russia, and Anglo-Russian mining company Polymetal International plc (Polymetal) were both demoted from the FTSE 100.

The second quarter saw Royal Mail plc dismissed from FTSE 100. According to the postal service group’s for 2021–22, the company is no longer benefitting from the tailwinds of the coronavirus pandemic, which saw a significant uptick in postal volumes as a result of the temporary safety restrictions introduced to combat the virus. Similarly, ITV plc left the FTSE 100 as competition in the streaming sector became extremely fierce during the ongoing cost of living crisis. During the third quarter, three funds entered the FTSE 250—Bluefield Solar Income Fund, NextEnergy Solar Fund and Twentyfour Income Fund. The former two are investment companies for low carbon assets, particularly those in the field of solar power, which could mark an increase in support for green energy funds among the investor community.  However, it could also reflect the general increase in energy prices amid the Ukraine conflict, as renewable energy remains tied to wholesale energy prices. The final quarter of the year reaffirms this, with Harbour Energy plc entering the FTSE 250. The independent Scotland-based oil and gas company saw its share price go into free fall following the publication of its  for the first half of the year.  

Tech

This year has drawn into question London’s attractiveness as a listing location for technology companies, with companies who do choose to list receiving a lukewarm response from investors. 

Cyber-security firm Darktrace’s May 2021 initially saw its share price surge, only for it to be ejected from the FTSE 100 soon after listing, following fading investor interest. Currently, the FTSE 100 remains light on technology companies, with the majority of its constituents still being made up of those operating in traditional industries such as banking, investment, and oil and gas. However, Market Tracker data indicates that investor appetite for tech stocks is on the rise. In 2021, 15 tech companies completed London IPOs, a steep jump from only two in 2020. Nonetheless, these figures are in stark contrast to Nasdaq’s reported figures of 53 tech company listings in 2021 and 24 listings in 2020.

UK listing reform

The reform of the UK listing regime remains ongoing. The reforms are intended to retain the strong levels of investor protection while also making the UK a more appealing location for new economy businesses to list. The key recommendations include adopting more relaxed rules in relation to special purpose acquisition companies (SPACs), reviewing the prospectus regime, allowing companies with a dual class share structure to list on the premium sector and allowing companies to use different methods in demonstrating liquidity. Along the changes already implemented, companies with dual class share structures are allowed to list on the premium segment, and the free float requirements have been reassessed to provide flexibility (from 25% to 10%). According to the LSE, the approach towards wholesale markets, UK prospectus regime, ARGA and national security will be addressed in 2023.

Further resources and data

Looking ahead, we anticipate a steady, yet measured, increase in transactions in 2023. For more in depth analysis of the key developments in this area, see our blog posts from 2022:

Longevity IPO promises new lease of life for London markets

Stock market volatility following conflict in Ukraine

FTSE 350 Q1 2022 reshuffle—Ukraine conflict sees board exodus at Evraz and Polymetal as share prices plummet

CVC intends to snub London for Amsterdam IPO

SPACs still lack a special purpose in London

Schroders simplify share structure

UK Equity Capital Markets 2021-2022: Market Tracker Trend Report

Arm still plans to wave goodbye to London

FTSE 350 Q2 2022 reshuffle—Royal Mail fails to deliver while Centrica burns bright

Haleon disappoints on market debut

FTSE 350 Q3 2022 reshuffle—Energy companies burn bright as Abrdn falls from FTSE 100

Energy companies experience windfall profits despite climate pressures

FTSE 350 Q4 2022 reshuffle—Scottish companies storm FTSE 100

All transactions covered in this update are available on the Market Tracker deal analysis tool containing over 8,000 public company deal summaries. For trend reports and other analyses see our Trend Reports (a subscription to Lexis®PSL is Corporate required).