Business Leader spoke to London Stock Exchange Group, to give businesses all they need to know about London’s international public markets.
What are the benefits of going public?
Joining a public market such as AIM or the Main Market can both help businesses to grow and enhance their profile. A listing on London Stock Exchange gives companies access to deep pools of capital, both at IPO and for the long-term.
What is the difference between AIM and the Main Market?
AIM is the world’s leading growth market, traditionally home to ambitious companies looking to raise long-term equity finance. Over its 24-year history, more than 3,800 companies have raised nearly £110bn through AIM, with 60% of this being through further issuances. The Main Market generally admits larger, more established companies and offers the potential to be included in indices such as the FTSE 100, FTSE 250 and others. Companies on AIM may decide to proceed to the Main Market once they reach a certain size and stage of development.
What trends have you been seeing?
IPO activity in the UK remains strong, with a significant IPO rally in the second quarter of this year. This has contributed to an overall 35% increase in IPO capital raised on London Stock Exchange’s markets in the first half of 2019, compared to the same period last year. Over £19bn of equity capital was raised in H1 – almost three times more capital than on the next largest European exchange.
Among the many companies to have listed on London Stock Exchange over the last 18 months, Trainline’s £1.1bn float on the Main Market in June 2019 stands out as the largest UK firm to do so. The listing is helping fuel the growth of the train booking app as well raising its public profile.
At the same time, AIM has cemented its position as the world’s leading growth market. Through AIM, companies raised £2.4bn at IPO and in follow-on capital in H1, accounting for 65% of growth market capital raised in Europe. One of the key benefits of a public listing is a company’s ability to return to the market to raise further capital to fund future development. In 2018, 70% of capital raised on AIM was from companies choosing to raise new capital.
What does a company need to float?
Becoming a public company is a significant decision. Companies should have a well-defined business plan, a demonstrable track record and a clear equity story. Planning is essential to a successful float and can take 6–12 months. Companies will need to appoint advisors for the IPO, a law firm, broker, and others depending on the market they are planning to join. To meet the requirements of the market, companies along with their advisors will look at whether they have the right corporate structure, governance and controls.