London’s financial sector shifting from IPO frenzy to M&A in 2016

Rick Steves

Following news that the City of London is witnessing a sudden drop in IPO volumes, cutting the amount raised by almost 75 percent since the previous quarter, at £1.6B (Q1 2016) from £4B (Q4 2015), it is worth noting that FinanceFeeds CEO Andrew Saks-McLeod had already provided guidance to what to expect in 2016. Many […]

London-Square-Mile

Following news that the City of London is witnessing a sudden drop in IPO volumes, cutting the amount raised by almost 75 percent since the previous quarter, at £1.6B (Q1 2016) from £4B (Q4 2015), it is worth noting that FinanceFeeds CEO Andrew Saks-McLeod had already provided guidance to what to expect in 2016.

Many companies have decided to shelve their plans to publicly list their stock in reaction to fiscal and political turmoil, the bust of the commodities bubble, overall volatility, and now the UK referendum over EU membership.

2016 is unfolding as expected, giving way to M&A and collaborative operations among firms at the top to globally expand via R&D namely in technology solutions and open source interfaces.

Consolidation is a keyword for 2016 and after speaking to Christian Frahm, CEO at CFH Group, in February to assess this trending process, FinanceFeeds confirmed that the Swiss National Bank peg removal provided many industry participants with an opportunity to consolidate their respective sectors, outlining CFH’s interest in going on an M&A drive, leading to the appointment of Dipak Rastogi, CEO of Citi Venture Capital International and expert in mergers and acquisitions.

In the wake of recent events, the question that many are asking now is “Will the FX industry condense via M&A?”, to which FinanceFeeds CEO Andrew Saks-McLeod provided an Op Ed in early March. In that particular analysis, the point was made that similarly to the US traditional banking sector having consolidated from 37 to 4 companies since the early 90’s, the same could happen to the Forex industry in some of the more established jurisdictions where companies have large purchasing power.

So far this year, there were 15 listings on London main market and London Alternative Investment Market, with Metro Bank, Countryside Properties and Ascential accounting for 45% of the total capital raised. Regarding the Forex industry, we have seen CMC Markets gradually lowering the expected market valuation, from £750m to £730m, only to see the IPO pricing the company at £691m in February 5. Still, CMC Markets Founder Peter Cruddas had a careful approach, by floating only 31% of stock, equivalent to £218m.

 

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