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IPO investments deliver returns 7x higher than the market

8 November 2013

Research by Deloitte has found that £1,000 invested in shares in each of this year’s ten IPOs (£10,000) would have returned £13,520 on 31 October 2013. This return is £3,032 more, or seven times greater, than investing the same amount in the FTSE 100 Index at the time of each company’s IPO.

On average IPO share prices outperformed the market by 30.3 percentage points. The share price of this year’s IPOs increased by 35.2% on average from listing to 31 October 2013, compared to an average increase of 4.9% for the FTSE 100 Index over the same periods.

John Hammond, head of Equity Capital Markets at Deloitte, said: “IPOs have returned with a bang to the London market. An investment of £1,000 in each of the ten IPOs at the time of their listing was worth £13,520 on 31 October 2013, compared to £10,488 from the FTSE 100 at the equivalent time. This means an investor would gross £3,032 more from shares in IPOs. Seven of the IPOs in the first ten months of 2013 have outperformed the FTSE 100, typical of a new confidence surrounding IPO activity.

“We expect another half a dozen or so IPOs in the final two months of this year driven by the strongest market sentiment for years.

“So far in 2013 IPOs have diversified from the mining and oil and gas focus of recent years, suggesting a broader based interest in IPOs of companies. All of this year’s IPOs other than Royal Mail have been of private equity (PE) backed companies, with none in 2012. Indeed, for the last few years the concept of a PE backed IPO had become something of an oxymoron.”

Note: IPOs as referred to above are defined as London Main Market Premium Listings for trading companies (i.e. investment companies, venture capital trusts, transfers from other markets and cash shells have been excluded).

IPO Barometer - Year to 31 October 2013

Table: IPOs in ten months to 31 October 2013 and share price and FTSE 100 performance from listing date to 31 October 2013


End

Notes to editors

About Deloitte
In this press release references to Deloitte are references to Deloitte LLP, which is among the country's leading professional services firms.

Deloitte LLP is the United Kingdom member firm of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, whose member firms are legally separate and independent entities. Please see www.deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms.

The information contained in this press release is correct at the time of going to press.

Member of Deloitte Touche Tohmatsu Limited.

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