Hunting down regional IPOs

The North East team at investment bank and corporate stockbroker N+1 Singer is focused on uncovering the Greggs, Sages and Bellways of tomorrow and highlighting the attractions of IPO (a stock market flotation) to ambitious businesses in the region…

Founded in 2006, N+1 Singer was backed initially by one of the oldest dedicated small companies’ banks, Singer and Friedlander, which provided a key part of its DNA.The Newcastle-based team joined through a merger with Brewin Dolphin’s corporate advisory and broking business in 2012.

After a busy and successful six years, the firm has recently signalled its ongoing commitment to the region, extending the lease on its office on Grey Street for another five years.
James Tetley joined the firm from KPMG in 2007 and now runs the Newcastle office. He says: “We are proud to be offering something unique in the North East market with experienced corporate financiers and corporate brokers, equity research analysts and a highly-regarded sales trader based in our Newcastle office.

“We have hired six graduates from local universities in recent years and continue to look for new talent and experienced hires. We also work hand in glove with our London office, which gives us access to institutional capital through close relationships with many of the leading fund management houses in the City.”

As one of the top three advisors to AIM-listed companies in the UK, N+1 Singer has advised on more than 125 IPOs and secondary fundraisings over the past five years. This year has started in a similar vein with a £250 million fundraise for The PRS REIT and a £60m fundraise for leading veterinary services company CVS Group. James continues: “Given the strength of institutional demand, we are keen to meet ambitious and dynamic local businesses, to find out about their growth plans and to help them decide whether a stock market listing would be right for them. We raised £375m through IPOs in 2017 and the market remains very much open to attractive businesses with credible growth plans.”

Last year was the busiest year for stock market flotations for three years. 106 companies floated on the London Stock Exchange during the year, raising £15 billion, an increase of 164 per cent on the previous year. AIM, the smaller companies’ growth market, also ended 2017 on a high: 49 new companies floated on AIM, raising £2.1 billion, a 97 per cent increase on the prior year.

2017 was also a positive year for share price performance post IPO. On average, new companies listed on the London Stock Exchange increased in value by 12 per cent and those listed on AIM increased by 11 per cent. Taking a longer-term view, 2700 companies have floated over the past 20 years on the London Stock Exchange and AIM markets (excluding investment companies and investment trusts).

The tech sector (software and hardware combined) accounted for around 10 per cent of all companies floating over that period, which makes this the most popular sector to IPO. Other well represented sectors include healthcare and life sciences, support services, general financials, media and industrials.

It is perhaps no surprise that the tech sector has thrown up more IPO candidates than any other, given the sector’s disruptive potential, high growth characteristics and demand for capital. Having said that, there is a clear appetite for good quality businesses with strong management teams across a wide range of sectors. N+1 Singer’s most recent IPO was a £25m fundraise for Springfield Properties, a leading Scottish housebuilder. The IPO was oversubscribed and the shares have performed well since listing.

Preparing for an IPO typically takes six to nine months and consumes a significant amount of management time and energy, but it can be a transformational process. Rachel Hayes, who joined the firm in 2010 and has 20 years’ experience in equity capital markets, explains: “The IPO process itself can be gruelling, but it provides permanent capital to invest in growth plans, a currency for future acquisitions and it raises a company’s profile significantly. It also brings institutional investors onto the shareholder list, allows existing investors and business founders to realise some of their investment and provides an opportunity to incentivise existing employees through share schemes.”

In the years after IPO, companies often return to the market to raise additional capital as their growth plans develop. Rachel continues: “We seek to build long-term relationships with our clients, working closely together to help to achieve their long term ambitions. We recently advised Quantum Pharma on its £160m takeover by Clinigen, a year after raising £15m for the company in a secondary raise on the stock market.

“Other long-standing North East clients include tech businesses Zytronic (touch screen displays) and Stadium Group (wireless, power and touch screen technologies), as well as Hargreaves Services, which operates in the infrastructure, energy and property sectors.

“We look forward to helping more ambitious North East companies fulfil their potential over the coming years.”

Written by James Tetley, Deputy Head of Research, N+1 Singer for the North-East Times 

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