Corporate finance – Question: Is the IPO back?

Given that this is a corporate finance page, the answer shouldn’t be too difficult – but here it is anyway – they’ve all allowed themselves to be associated with the possibility of an IPO this year.

Not so surprising you may say, unless you’re a flotation specialist who has been struggling to find work over the past couple of years. In which case you may just be banking on a bonus soon, because IPOs look like they could make a comeback of which Lazarus would be proud.

Or are they? I know this is a bit of a tease, but after three uninspiring years the sector is awash with speculation that a turning point may just have been reached and the big bonuses are on the way back.

Anyone will tell you that there’s a lot of recruitment going on in the City at present, a clear sign that the specialists expect some kind of growth in business.

Corporate financiers among the accountancy players have been traditionally less excitable. Their business models largely don’t rely on laying off hundreds of staff as things go bad, and as a result they are far less prone to losing their focus on the realities.

Neil Austin, head of new issues at KPMG is a case in point. He’s recently been speculating publicly on the prospects of an IPO revival. He points out there has been a lot of talk, but only three companies listed on the main market in the first quarter of 2004.

AIM has been different, of course. Plenty of smaller businesses have been using that market to raise money.

But what about the future? Well, there seems to be a lot of intent out there. Austin says the outlook is much more positive than it has been in some time. But ‘the future looks sufficiently hazy in all markets around the world that it is far from certain that we will be able to say the same come the autumn,’says Austin.

So the lesson, if we read between the lines of his piece in Corporate Financier, is that we shouldn’t get carried away with what might only be early signs.

  • Gavin Hinks, deputy editor of Accountancy Age.

Related reading

PwC office 2