Recent UK IPOs: how have they performed?
It has been a mixed year for new listings in London over the last 12 months. We have a look at the largest UK IPOs on the Main Market and AIM over the past year, as well as the biggest winners and losers.
Recent UK IPOs in review
It has been a mixed year for new companies listing in London. Below are some quick facts about UK initial public offerings (IPOs) over the 12 months to July 2019:
- Overview: a total of 64 companies have listed in London since the start of July 2018, raising a total of £7.5 billion through their IPOs, according to data from the London Stock Exchange (LSE).
- IPO slowdown: the number of firms completing an IPO has slowed significantly compared to the same period a year earlier, but once listed they have raised more money. In the period between July 2017 and July 2018, 116 companies raised nearly £9 billion through IPOs.
- IPO performance: around 60% of IPOs over the past year have posted gains since listing, with 40% having seen a decline in share price (as of July 15, 2019).
- IPOs in 2019: a total of 20 companies have listed in London since the start of 2019, raising just under £2.7 billion, with the majority having seen an increase in share price.
Read more on top upcoming IPOs for 2019
Largest London IPOs in the past year
A handful of large companies have listed in London in the last year, but some have had a better start to life as a publicly-listed company than others. A total of 45 companies have listed on the Main Market (including the International Main Market) over the last year, raising just shy of £7 billion. Around 53% of them have posted gains since listing.
Among those that have not received a warm reception from investors is luxury supercar maker Aston Martin, which has lost half its value since its IPO, and peer-to-peer lender Funding Circle, has crashed by more than 70%. But substantial gains have been made elsewhere, with payments provider Network International Holdings having jumped by over one-third while Trainline, the newest addition to the LSE, has already risen by over 20% in just one month.
Below is a table detailing how the largest Main Market IPOs over the past year have performed since listing:
|IPO date||IPO price||IPO valuation||Share price (15 July 2019)||Share price movement since IPO||Market cap (15 July 2019)|
|1. Aston Martin||08 October 2018||£19||£3.89 billion||£9.35||-51%||£2.17 billion|
|2. Network International Holdings||15 April 201||435p||£2.60 billion||£5.86||35%||£2.88 billion|
|3.Trainline||26 June 2019||350p||£1.99 billion||424.5p||21%||£2.04 billion|
|4. Funding Circle||03 October 2018||440p||£1.26 billion||120.7p||-72%||£410.2 million|
|5. Finablr||20 May 2019||175p||£1.20 billion||160p||-8.60%||£1.12 billion|
How have major UK IPOs performed?
Aston Martin shares see false start
Aston Martin launched its IPO at a difficult time for the car industry, which is being battered by trade wars, Brexit, the fallout from dieselgate and the costly transition to electric and self-driving cars. But the luxury carmaker remains confident it is in a better position than most to weather the storm, partly because of its affluent clientele. But the market remains unconvinced, with Aston Martin shares having shed half their value since October.
The company has ambitious plans to sell 14,000 vehicles a year by 2022 at an adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 30% and an EBIT margin of 20%. Last year, it sold just 6,441 cars at margins of 22.6% and 13.4%, respectively. Volumes jumped 26% and revenue followed suit, but margins contracted. The cost of the IPO dragged the carmaker to an annual loss of £68 million.
Aston Martin’s president and chief executive, Andy Palmer, described 2018 as an ‘outstanding year’ that demonstrated the company’s resilience to the tough environment and geared it up for another year of growth in 2019. It aims to sell between 7,100 and 7,300 cars this year at an EBITDA margin of 24% and EBIT margin of 13%.
But investors seem to be wary about that outlook, particularly after its first quarter (Q1) results. Volumes climbed 10% but pressure on prices meant revenue nudged up by only 6% while margins contracted significantly. At the bottom line, it swung to a £17.3 million loss from a £2.8 million profit a year earlier. It said investing in its new plant and promoting new models was the cause and reaffirmed its guidance for the year, stating the second half will be better than the first.
Network International Holdings: profitable and pays a dividend
Network International Holdings, which offers payment solutions to businesses in the Middle East and Africa, has been embraced by investors since listing in April with shares having risen by more than one-third. It was the biggest tech IPO in London since Worldpay in 2015, although the company did not raise any new funding.
Considering Worldpay, also a payments provider, was bought for $43 billion earlier this year, it is easy to see why investors have piled into the stock. The company’s chief executive, Simon Haslam, has said the company offers the opportunity to invest in the ‘structural growth opportunity’ as more people shift toward using digital payments.
The company is already highly profitable. Revenue grew from $235 million in 2016 to $262 million in 2017 to $298 million in 2018, generating pre-tax profits of $55.5 million, £86.3 million and £57.7 million, respectively. It has also adopted a ‘progressive’ dividend policy that aims to pay at least 15% of underlying net income. Network International Holdings will release its first results as a publicly-listed company on August 14, when it will publish its figures for the first half (H1) of 2019.
Trainline: all aboard!
Trainline has posted solid gains since listing last month. The company operates its own platform for people to buy train and coach tickets digitally across Europe and in Asia. The company is loss-making but moving in the right direction. Revenue has grown from £157.8 million in the year to the end of February 2017 to £209.5 million in the 2019 financial year, while losses shrank from £31.2 million to £13.7 million.
In Q1 to the end of May, group net ticket sales rose 20% to £906 million, with the UK Consumer business up 27% and the International arm increasing 51%. For the full year it expects UK Consumer sales to rise ‘in the high teens to low 20% range’ while the International arm should deliver 80%-100% growth thanks to new revenue streams. Over the medium term it hopes to deliver a contribution margin of above 50% compared to the 44.7% delivered in the last financial year.
Like many tech stocks, focus is currently more on growth than profit. The company says the clear majority of train and coach tickets are still bought offline, so it has plenty of room to grow.
Read more on what you need to know about the Trainline IPO
Funding Circle warns growth expectations have halved
Funding Circle’s outlook has changed dramatically since it listed last year, leading to a significant drop in its share price. The company, which lends to small businesses in the UK, US, Germany and the Netherlands said revenue rose 30% in the first of 2019 and that loans under management climbed 37% to £3.5 billion. But the company has focused on protecting returns for investors that put up the money it needs to lend to businesses, and has therefore been taking a hit, with an adjusted EBITDA loss of 25% - a fall from 20% in 2018.
It said at the start of July that it had ‘proactively further tightened lending to higher risk band businesses’ because of the uncertain economic outlook to protect investor returns, but said this would mean revenue will grow by 20% in 2019 rather than the 40% it originally forecast. It will still report adjusted Ebitda losses, but they should be better than 2018. Its co-founder and chief executive officer (CEO), Samir Desai, said the business was taking a ‘prudent course of action’ to ensure it can achieve its aim of becoming ‘the world's largest small business loans provider’. Funding Circle will post its H1 results in full on August 8.
Read more: Everything you need to know about the Funding Circle IPO
Finablr: a slow start, but dividends are around the corner
Finablr listed in May, and owns several foreign exchange operators, including Travelex and UAExchange. Like Network International, the company says it offers investors a chance to gain exposure to a structural growth opportunity as global digital payments grow. Finablr processed over 150 million transactions last year in over 170 countries and has over 23 million retail customers and 1,500 business partners. It facilitates payments on behalf of big names like Google India and WeChat Pay. Revenue rose to $1.43 billion in 2018 from $1.35 billion in 2017, with its pre-tax loss narrowing to $4.4 million from $15.9 million.
The Financial Times reported its 175p IPO price was lower than the 210p-260p range it had previously indicated, partly because of other disappointing IPOs. Shares have dipped during its short time as a publicly-listed company.
Finablr does not pay a dividend but intends to begin making regular pay outs soon, equal to at least 15% of adjusted profit after tax. The first one should be an interim pay out for 2020. The company will report interim results covering the H1 of 2019 on 20 August.
Largest AIM IPOs in the past year
AIM is typically the destination for smaller but higher growth companies seeking capital to expand. A total of 19 companies have listed on AIM in the past year, collectively raising over £500 million. They have been, generally speaking, more successful than their larger counterparts, with 68% of them having gained value since listing.
Below is a table detailing how the six largest AIM IPOs over the past year have performed since listing:
|IPO date||IPO price||IPO valuation||Share price (15 July 2019)||Share price movement since IPO||Market cap (15 July 2019)|
|1. Sensyne Health||17 August 2018||175p||£232 million||162.9p||-6.90%||£209.4 million|
|2. Loungers||29 April 2019||200p||£198 million||213.9p||7%||£197.9 million|
|3. Jadestone Energy||08 August 2018||35p||£187 million||59.09p||69%||£268 million|
|4. Nucleus Financial Group||26 July 2018||183p||£166 million||180.1p||-1.60%||£137.7 million|
|5. Argentex Group||25 June 2019||106p||£143 million||150p||42%||£169.8 million|
|6. Kropz||30 November 2018||40p||£102 million||16.38p||-59%||£45.2 million|
Sensyne Health: a long-term play
Sensyne Health, which has partnerships with the National Health Service (NHS) and the University of Oxford, uses artificial intelligence to anonymise patient data so it can be used for research while safeguarding privacy. The company’s software is diverse and allows researchers to tap into invaluable data. Some of its other programmes include an early warning system named SEND that monitors a patient’s vitals in hospital and software that allows patients to manage issues like chronic obstructive pulmonary disease (COPD) and diabetes from home.
The company used the £58 million of net IPO proceeds to bulk out its research and development (R&D) and business development departments. The company only generates nominal revenue and its losses are expected to widen in 2019 as it continues to invest, making it a long-term play. This year, Sensyne aims to sign up more NHS trusts, work with more pharmaceutical companies, and advance its string of research programmes for new products and services.
Loungers: toasting success as others drown their sorrows
Loungers has managed to find growth in a market which has been hit hard over recent years. The company runs 150 café bar restaurants in England and Wales – having opened four since listing in April. It has aggressive plans to open around 25 new sites a year. Its sites are marketed under two brands - Lounge and Cosy Club. A report released by independent consultants that were hired by Loungers said there is potential for the business to expand to over 400 Lounges and more than 100 Cosy Clubs.
The company says it has “consistently outperformed the wider UK hospitality sector” over the past three years, a time when many food and drink establishments have gone under. In its preliminary results for the year to April 21, 2019, it said revenue jumped 26% to £153 million with like-for-like (LfL) sales growth of 6.9%. Those results will be released in full on August 28.
The company has consistently delivered positive gross profits and adjusted earnings. It intends to pursue a progressive dividend policy but has not set out a timeframe.
Jadestone Energy shares are well-oiled by Montara restart
Jadestone Energy produces oil and gas from projects offshore Australia and has exploration and development stage projects in Vietnam and other parts of Southeast Asia. The company’s main project, Montara, restarted production in January after it had to be shut down for extensive maintenance work, which has proven a major catalyst for shares. The restart meant overall output more than trebled year-on-year (YoY) in Q1 2019, and more than doubled from the previous quarter. Prices remained stable, but costs fell 18%, resulting in a 25% jump in net revenue and a quarterly pre-tax profit of £8.4 million compared to a £16.6 million loss the year before.
The company looks set to continue improving production going forward by carrying out further work on Montara and sorting out issues at its Stag oilfield, and that has fed through to the large jump in its share price since listing.
Nucleus Financial Group is profitable, pays a dividend and is growing
Nucleus Financial Group is a tech firm that offers a ‘wrap platform’ – one that allows customers to use multiple third-party services under one roof, creating a single, manageable online account. It is currently responsible for £14.7 billion worth of assets under management (AUA) on behalf of 93,000 clients at the end of March 2019. AUA jumped from just £13.8 billion three months earlier.
The company is profitable and pays a dividend. Revenue in 2018 totalled £49.4 million and it made a pre-tax profit of £5.7 million, up from £5.1 million. Adjusted profit, which strips out one-off costs including that of the IPO, rose to £7.7 million from £5.8 million. The company pays-out 60%-70% of profit after tax and the dividend for 2018 was 5p.
Argentex Group delivers consistent profit and is preparing to pay dividends
Argentex Group is a UK-based foreign exchange service provider that provides advice and forex transactions to a global client base. Argentex claims to offer 'improved pricing and a more efficient execution and settlement service than existing FX service providers, such as banks and larger broker-dealers'.
Argentex has delivered an operating profit in every financial year since incorporation. Revenue in the year to the end of March 2019 more than doubled YoY to £21.9 million and it reported an operating profit of £9.4 million, up from £4.1 million the year before. It served 1 141 corporate clients in the year, up from just 898. Even after it booked £400,000 of IPO costs, pre-tax profit jumped to £7.8 million last year from £3.9 million.
The company has said it intends to pay interim and final dividends equal to 30% of its profit after tax, adjusted for any exceptional items, starting with a first-half pay out for the six months to the end of September 2019.
Kropz already digging deep in investor’s pockets
Kropz is a fertiliser company operating in Africa. The company’s most advanced project is the Elandsfontein project in South Africa, where it has invested $120 million since 2010. The project, which is due to enter production in Q4 2020, will have capacity to sell over 1 million tonnes of phosphate rock concentrate each year. It has two earlier-stage projects: Aflao in Ghana and Hinda in Republic of Congo, the latter of which it recently took full control of.
The company is unsurprisingly loss-making, and it recently raised another £3.1 million to advance its earlier stage projects and support test work at Elandsfontein. Those shares were placed in late June at 17.6p each – less than half its IPO price. The uncertain road to profitability, the possible need for more cash in the future and the heavy discounted placing has weighed on shares.
London IPOs: biggest winners and losers over the past year
Below is a table outlining the best and worst performers among the companies to have completed an IPO between July 2018 and July 2019, as of 15 July 2019:
|Top 5 winners||Gains|
|1. Dev Clever||278%|
|2. Manolete Partners||182%|
|3. Renalytix AI||171%|
|4. AJ Bell||162%|
|5. Litigation Capital Management||95%|
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