North East firms are eyeing potential future flotation on the London Stock Exchange, one of the market's senior bosses has revealed.
Marcus Stuttard, head of AIM and UK Primary Markets at the London Stock Exchange Group (LSEG), has confirmed that regional companies are currently considering Initial Public Offering (IPO), saying greater use of technology to hold meetings and deliver presentations had opened up capital to regional firms even more.
Nearly £50bn was raised by the London Stock Exchange in 2021, including £16.8bn in IPOs of which Tyneside-based Kitwave's £64m raise was one. While 2022 saw a decline in activity, Mr Stuttard said: "Talking to the advisory community, in the back half of last year they were relatively cautious about when IPOs would start to pick up and we're now starting to see the pipeline grow. I think the second half of this year will be a much more active period."
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Mr Stuttard did not disclose names of firms considering flotation, but said there has been renewed activity from smaller, sub-£50m companies looking to raise funds, encouraged by tax-incentivised investors such as the venture capital trusts who have played a role in funding some of the small and early stage businesses. Amid market turmoil last year some businesses were said to have put flotation plans on ice but now some were said to have sought early feedback from investors to prepare for when the window seemed right.
He said the green economy transition and technology strengths in particular presented opportunities for the North East. He pointed to the fact that companies can do virtual IPO roadshows and investor meetings without travel has helped to break down some barriers for firms outside of the capital.
He added: "What I'd say to businesses in the region is: don't put an IPO in a standalone category. Think about it for the long term, plan for the long term and that will often put the business into better health to do a broader range of things and keep options much more broadly open."
And to help firms make the switch from private to public ownership, some measures have been put in place in recent years. Mr Stuttard said: "There's been a lot of regulatory reform which started with the Hill Review, and that's starting to return into some tangible benefits.
"There have already been reforms to the main market, to make it easier for companies to transition from private to public and we've seen that agenda starting to gather momentum this year. The Chancellor announced in Edinburgh a package of 30 reforms and we'll see some of those coming through."
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