Tech IPOs have led the listings charge
Consumer tech IPOs have dominated the IPO market for the past couple of years. The London Stock Exchange now has more tech and consumer internet companies in the FTSE 350 than at any point since the dot com boom year of 2000.
Investors have been attracted by the potential high returns delivered by late-stage, tech start-ups during their first few years of trading as a public company, as they begin to deliver profits following periods of often rapid growth.
At the start of 2022, the UK was home to 116 unicorns and 213 ‘futurecorns’ - high growth tech companies that are predicted to reach a value of $1 billion mark in the future. Last year, tech IPOs in London raised £6.6 billion, a fifty percent increase on 2020’s figures (£3.1 billion) and nearly 40% of total IPO proceeds in 2021.
The UK is home to a thriving technology industry. As our lives become more and more digital, more tech sub-sectors and businesses will emerge and grow. As one as of the world’s largest financial centres it’s no surprise that fintech has been one of the leading success stories in UK tech, but e-commerce insurtech, medtech, and restaurant tech are hot on its heels as sectors that have soared in popularity and value in recent years.
Tech start-ups are leveraging data in innovative ways, harnessing talent from across the UK, and investing heavily in R&D to drive growth. Deloitte noted that its Technology Fast 50 invested over three times more on R&D as a percentage of revenue compared to the S&P 500 last year.
Cambridge-based Darktrace, a global leader in cyber AI, made its debut on the London Stock Exchange and London also proved its international prowess in tech by being the market of choice for IPOs by TrustPilot (Denmark), AlphawaveIP (Canada) and Devolver Digital (the U.S.) in 2021. The UK listing law reforms in 2021, including the development of the UK’s SPAC (special purpose acquisition company) regime, has made London an even more attractive market for tech IPOs.
Following the record-breaking IPO market of 2021, the IPO market has been subdued in the first half of 2022 as the market entered bear conditions. However, there is a strong pipeline of IPOs, with tech expected to continue to lead the charge in terms of the number of deals.