📉 IPO market dries up

Good morning. In today’s update - the UK’s IPO market dried up in the first half of 2023, Leicester City FC got a slap on the wrists from the CMA, and Europe’s largest IPO this year is coming from an unlikely source.

Markets

• London stocks closed the session lower on Wednesday as markets digested the weaker service sector data.

  • The FTSE 100 and FTSE 250 fell 1% and 0.8%, respectively.

• Education company Pearson gained 2.5% after being upgraded by analysts at UBS.

• Large-cap miners Anglo American (-2.7%) and Antofagasta (-2.2%) were among the losers over worries the Chinese economy is slowing.

Corporate News

UK investment bank Numis warned of the “effective closure” of the UK IPO market, in one of the last trading updates before its acquisition by Deutsche Bank completes; the advisor said that fees over the last three months had weakened due to a “deteriorating” market backdrop, which is expected to “remain difficult” through the end of the year. (Link, Numis)

Inflation “reduced dramatically” over the last 12 months, says AO World, as supply chain issues and shipping prices eased; the electrical goods retailer returned to profitability over the last 12 months, as profit before tax swung to £8m, up from an £11m loss the year before. However - revenue fell 17% to £1.1bn amid weak consumer demand and a shift away from “non-core channels”. (Link, AO World)

Demand for vans is outstripping supply, according to commercial vehicle rental firm Redde Northgate; the London-listed firm said supply might not catch up for two years, whilst the price impact helped profits surge by around a third for the year to April (to £179m). (Link, RN)

Deals

Despite a drab start to the year, the UK IPO market is showing signs of life, according to a report from EY, providing hope to investment banks on the hunt for fees; despite echoing Numis’ comments on a downbeat first half (total IPO proceeds down 95% compared to 2021), the Big Four firm noted a strong pipeline of deals provides a positive outlook for the medium term. (Link)

The UK government’s latest bond issuance was sold at the highest yield since 2007; the Debt Management Office sold £4bn worth of gilts expiring in October 2025, paying investors a yield of 5.668%. (Link)

In today’s VC update:

• uMed - a medical research company looking to increase the number of clinical trials in the UK - is set to announce a £10m fundraise from investors including Albion VC and Playfair Capital. (Link)

• Kinnu - an AI-powered edtech platform - raised a $6.5m funding round led by LocalGlobe. (Link)

• Recruitroo - a recruitment platform looking to remove barriers for international workers - raised €1m from investors including Delta Partners. (Link)

Economy / General

Leicester City FC found itself in the crosshairs of the Competition and Markets Authority, after the football club was found to be colluding with JD Sports on the sale of football kits; the pair admitted that JD Sports had agreed not to sell Leicester kits, in order not to undercut the club’s own store. (Link)

Growth in the UK services sector slowed during June, as companies took longer to make decisions amidst an uncertain macroeconomic environment; despite this, the S&P Services index remained in growth territory - recording a reading of 53.7 (above 50 signals expansion). (Link, S&P)

The FCA confirmed on Wednesday it was investigating whether Crispin Odey was a “fit and proper person” to work in financial services; Odey allegedly dismissed the executive committee at Odey Asset Management after it attempted to discipline him for his actions. (Link)

🌎 Global Snapshot

News

Despite choosing to pause rate hikes at the last meeting, most Fed officials agreed further monetary policy tightening was necessary, minutes released on Wednesday showed; the minutes also confirmed that the effects of rapid rate hikes on economic activity remained “uncertain”. (Link)

Europe’s largest IPO so far this year is coming from an unlikely source - Hidroelectrica, a Romanian energy producer, was priced on Wednesday at a market cap of around $10.3bn; the company, to be listed on the Bucharest stock exchange, is majority owned by the Romanian government (who will retain their stake post listing). (Link)

Mars announced the acquisition of Kevin’s Natural Foods - a producer of nutritious entrees and sides - for around $800m; the company, backed by PE firms Towerbrook and NewRoad Capital, was founded in just 2019. (Link)

Despite the AI hype, ChatGPT downloads are slowing - according to Bank of America analysis - down 38% in June. (Link)

Markets

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