Boost for UK plc as IPOs surge

56 initial public offerings or​ ​IPOs in London have​ ​raised £8.5​bn to the end of July, already surpassing the total amount raised for the whole of​ ​2016. This is a significant boost for UK Plc and another vote of confidence in our economy and the​ ​UK’s ability to fund the world.

And looking at the figures more closely, what is apparent is the innovation continuing to take place​ ​across our financial markets, with close to £2.5​bn raised through fund IPOs.

Listed funds, raising money from a pool of investors to back a number of investments across​ ​different sectors such as housing and renewable energy, are increasingly popular investment tools.

In 2017 alone, we’ve welcomed microcap funds, supporting SMEs, real estate specific funds for​ ​social housing and private rented sector and life sciences debt funds.

We marked a record first half of the year for fund listings and money raised on London Stock​ ​Exchange last month. The total capital raised by funds and real estate investment trusts (REITs),​ ​another type of fund structure, during the six months to end June reached £5​bn. Nine fund IPOs​ ​raised £1.4​bn whilst existing London-listed funds raised £3.6​bn​ in follow-on fundraisings.

What we’re seeing is that many of these funds are investing in the real economy, benefiting the​ ​wider public as well as shareholders. In March BioPharma Credit became the first London listed fund​ ​specialising in debt financing for the life sciences industry. A vibrant UK life sciences sector is critical​ ​to us all, supporting the development of knowledge and discovery of new medicines and treatments​ ​for diseases.

What is also noticeable is the attractiveness of the UK markets to US fund managers. Over £4.4​bn​ has been listed in London by US fund managers in 2017 alone. Just last month, New York-based Gabelli Merger Plus+ Trust PLC became the fifth fund from a US-based manager to list here,​ ​joining US-based Pershing Square Holdings which transferred its £2.9​bn listing from Amsterdam​ ​to London earlier in the year​.​

The UK has a long history in supporting the growth of the global asset management industry. One of​ ​the first fund management businesses was set up in Scotland in 1873 to invest money in America​ ​and to this day, The Scottish American Investment Company, is still trading on our markets. And​ ​almost 150 years later, the UK, with London Stock Exchange at its financial centre, remains the​ ​destination of choice for international asset managers.

According to a market study last year by the UK regulator, the Financial Conduct Authority, the UK’s​ ​asset management industry is the second largest in the world, managing £6.9 trillion of assets. Over​ ​£1 trillion is managed for UK retail (individual) investors and £3 trillion on behalf of UK pension funds​ ​and other institutional investors. The industry​ ​also manages around £2.7 trillion on behalf of​ ​overseas clients.

Through London, UK and global asset mangers have access to a unique financial services ecosystem:​ ​deep, liquid pools of multi-currency investor capital; robust, transparent and trusted markets; a legal​ ​system that treats investors of all nationalities equally; the largest concentration of leading financial​ ​services advisers and an advantageous time zone that bridges Asia, the Middle East, Europe and​ ​North America.

And in the current macro economic environment with interest rates at historic lows, funds can​ ​provide strong yields for investors looking to diversify their portfolios and benefit from long-term​ ​economic growth but with the usual proviso that any investment carries risk. At the time of writing,​ ​over 90 per cent of 2017’s fund IPOs are currently trading at a premium to their net asset value,​ ​meaning the stock value of the fund is trading higher to the net asset value of the funds’​ ​components.

2017’s UK listed fund and general IPO activity is testament to the enduring strength of the UK​ ​economy. We are a global market place and the international listing destination of choice for​ ​equities, fixed income and funds; whether to raise capital or to enable investors worldwide more​ ​efficient access to trade these securities.

Echoing what the Lord Mayor of London, Dr Andrew​ ​Parmley, recently said, “when companies have access to the UK, they have access not only to​ ​London’s deep pools of capital and business expertise, but the world’s as well.”

2017 notable fund listings:

​​ Residential Secure Income plc raises £180​m to acquire portfolios of homes across​ ​residential asset classes

 Sherborne Investors raises £700​m on the Specialist Fund Segment of the Main Market

 BioPharma Credit, the first London listed fund specialising in debt financing for life sciences​ ​industry, raises £608m on the Specialist Fund Segment

 US-based Pershing Square Holdings successfully lists its £2.9​bn fund, originally listed in​ ​Amsterdam

 PRS REIT, the first listed fund to focus solely on Private Rented Sector properties, raises £250​m​

 Impact Healthcare Trust raises £160​m to invest in a portfolio of care homes

 461 funds are quoted on London Stock Exchange