London set for bumper year of IPOs

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This year is already expected to be a bumper year for investment banks after a rash of large M&A deals in recent months but it is also likely to be the biggest year for IPOs in five years.

The value of companies joining London’s main and junior markets so far this year totals $16.7bn, compared to $18.7bn for the same period in 2000, according to data from Thomson Financial and Thomson One Banker.

On Monday Britvic, the maker of Robinsons soft drinks and Tango, became the latest company to join a growing list of established companies that have taken the decision to pursue a listing in London this year.

The soft drink maker is expected to attract a valuation of up to £800m, which would place it among the largest debuts of the year.

Heading the list of 160 companies to have listed so far this year is PartyGaming. The online poker group’s debut in June was valued at $1.7bn. Smaller rivals Empire Online and 888 Holdings also took a gamble and floated on the London exchange for a combined value of almost $500m.

Others to have made a splash include Inmarsat, the satellite phone services company, which listed for $740m in June and RHM, the maker of Bisto gravy, which floated for $1.2bn in July.

The market has been bolstered by an increasing number of foreign companies opting to list in London. The LSE this month scored a victory in its efforts to prise Asian companies away from New York when Lotte Shopping, the South Korean retailer, decided to stage part of its forthcoming listing on the UK bourse.

Russian companies have also been beating a path to the door of the London Stock Exchange this year including conglomerate Sistema, which raised $1.6bn in February, the country’s largest steel maker, Evraz in June, and gas producer Novatek in July. Elsewhere in the CIS, Kazakh mining companies also made the trip to London with copper miner Kazakhmys raising $1.4bn on its market debut in October and gold company Kazakhaltyn also announcing plans to list on the LSE.

But some of the year’s highest profile IPOs have failed to perform in trading. PartyGaming rallied to 179½ pence but subsequently slid, now trading down 19 per cent from its issue price of 116 pence, while RHM has also suffered falling 6 per cent since its float.

The robust equity markets mark a change in fortunes for the investment banks after lean years for issuance following the end of the tech bubble. Credit Suisse First Boston topped the bookrunner rankings for IPOs globally in the first three quarters of the year, followed by Goldman Sachs and Morgan Stanley.

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