Bytes of spring – technology firms join a rush to go public


As markets on both sides of the Atlantic hit fresh highs, boosted by hopes of an economic rebound from the crisis inflicted by the pandemic, tech companies are choosing their moment and queuing up to make their stock market debuts.

The first three months of the year are traditionally a quiet period for initial public offerings (IPOs), but in 2021 its was the busiest quarter for listings in the past 20 years, according to accountancy firm EY – and tech companies dominated.

The trend has continued in recent weeks, with tech firms boasting a combined valuation of more than $150bn (£108bn) announcing plans to float, clearly not put off by Deliveroo’s “flopperoo”, when the food delivery firm’s shares tanked on their market debut last month.

More encouraging for firms was Coinbase’s blockbuster float on the Nasdaq last week. Shares in the US’s largest cryptocurrency exchange rose 58% at the start of trading, valuing the company at about $100bn.

While the flurry of recent and planned IPOs has been dominated by the US, the UK is increasingly grabbing a piece of the action, as tech firms queue up to list on the London Stock Exchange.

While London has long been renowned for its deep pool of investors and the liquidity of the market, the UK’s benchmark FTSE 100 index is still dominated by traditional companies such as oil giants, miners, banks and insurers.

However, a wave of companies have announced their intention to float as investors hunt for places to put their money: they include online reseller MusicMagpie, online pension provider PensionBee, and British cybersecurity firm Darktrace.

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Someone holding up a phone with the pink Moonpig logo visible on the screen
Moonpig floated in February and is now worth £1.5bn. Photograph: M4OS Photos/Alamy

Darktrace, which is eyeing a £3bn listing, would become one of the rare “unicorns” – privately owned tech firms valued at more than $1bn – to enter the UK stock market. Another British unicorn, online card retailer Moonpig, floated in February and is currently valued at about £1.5bn.

The latest trend in corporate finance, special purpose acquisition companies (Spacs), which raise money before looking for privately owned businesses to invest in and bring to market, was also responsible for a host of deals, according to EY.

Chancellor Rishi Sunak does not want to miss out on this opportunity and is looking to liberalise rules about Spacs as part of sweeping reforms of the stock market to attract more fast-growing companies to the capital, rather than lose them to global rivals such as Amsterdam, New York and Hong Kong.

The current flurry of tech IPOs is just the beginning of a “golden decade”, according to Stephen Kelly, chair of Tech Nation, a body that helps tech startups to grow.

“It’s strategic to get at least 90% of UK tech companies to list in London, and a strategic goal has to be to attract international companies,” Kelly said. “I think this year we will see some companies from Canada, possibly the US and certainly the EU.” He also dismissed as a “myth” the suggestion that tech companies could achieve higher valuations in the US.

MusicMagpie, which specialises in secondhand tech such as smartphones and games consoles, is one of the companies seizing the day.

Founded in Stockport in 2007, the firm is planning a £208m flotation and decided London’s junior Aim market was the only place to list, according to its co-founder and chief executive, Steve Oliver.

“We’ve got a US division, branded Decluttr. It’s about 25% of our business and a massively exciting further opportunity,” Oliver said. “But we are a UK-based business and London – and indeed Aim – was the only place we considered. For what we are, a fast-growing online tech business, it seemed the perfect home for us.”

While many welcome tech companies’ interest in London listings, the dotcom crash of 2000 is seared into investors’ memories, and they will be on the lookout for signs of a bubble.

The sector will probably continue to expand, according to Laura Hoy, equity analyst at broker Hargreaves Lansdown, as “ultra-low borrowing rates have created a supportive environment for new businesses”. However she cautioned that electric car stocks and cryptocurrencies were “starting to look a bit frothy” .

A “danger sign” for Russ Mould, a director at investment firm AJ Bell, would be a series of copycat deals. “You wouldn’t want to suddenly see 53 cybersecurity companies all piling out the door at the same time. The early ones are going to be good, the later ones might be imitators, and the even later ones might not have much to them at all,” Mould said.



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