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IPO returns in 2014 outperform FTSE 100

Returns from company flotations in 2014 outstrip average FTSE 100 performance, Deloitte finds

RETURNS from company flotations outstripped the average performance of the FTSE 100 in 2014, according to research from accountants Deloitte.

As at 31 December, the 30 IPOs that had completed in 2014 generated an average return of 12.4%, outperforming the FTSE 100 by 14.4 percentage points over the year, the Big Four firm said.

The 11 IPOs launched in June showed the highest return of 32.2%, nearly triple the average for the full year. Out of the 30 IPOs, 22 were private equity backed and they generated an average return of 14.6%, significantly higher than non-private equity backed IPOs at 6.4%.

John Hammond, head of equity capital markets at Deloitte, said: “IPOs in 2014 have performed better than many would have expected. An investment of £1,000 in each of the 30 IPOs would have been worth £33,715 at the yearend, whereas a £1,000 investment in the FTSE at each IPO date would have fallen to £29,388.”

“With the recent intention to float announcements, as well as a decent pipeline longer term, we envisage the momentum continuing into 2015. There could be a few hiccups arising from the May election, a potential interest rate rise and a weak eurozone but overall we see opportunities in the market and potentially the busiest first quarter for IPOs in years.”

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