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06 December 2021

Redmayne Bentley Market Round Up

2021 has seen an influx of high-profile Initial Public Offerings (IPOs) all over the world, with companies such as Deliveroo in the UK, food manufacturer Oatly and Indian payments giant Paytm, all listing this year. However, a large portion of the IPOs which raised more than £1bn this year are now trading below their listing price, prompting concerns over their initial valuation and the excitement around these companies from large investors such as SoftBank and underwriters including Goldman Sachs and Morgan Stanley.

A recent example of excessive optimism was Rivian, an electric vehicle manufacturing company which has sold only a couple of hundred vehicles but is currently valued at over US$106bn, more than Ford and General Motors. Dealogic, a UK financial markets analytics platform, found that 49% of 43 IPOs that raised more than US$1bn or more this year in London, Hong Kong, India, and New York are trading below their issuance price compared to prior years, with the figure standing at just 27% in 2020 and 33% in 2019. The poor performance of blockbuster IPOs this year is particularly odd given the general march forward that financial markets, typically in the US, have endured despite the various global risks we currently face.

Blue Prism, a Warrington-based automation software group, may soon be the latest UK listed company to be taken over by a large US-based private equity group as the board confirmed its recommendation for a £1bn takeover bid from US private equity group Vista in October. While this was the only deal on the table at the time, SS&C Technologies have now prepared a bid of £1.2bn, a significant increase over the price offered by Vista. Blue Prism directors view the latest bid from SS&C as fair and reasonable amid Vista’s plans to merge the company with Tibco, a Silicon Valley-based data analytics company, and reduce the workforce of the group by 8% to 10%.

Please note that investments and income arising from them can fall as well as rise in value. This communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.
Redmayne Bentley Market Round Up
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