IPOs outperform FTSE100 over 2011-2012
4 February 2013
Research from Deloitte, the business advisory firm, shows that the share price of companies undertaking recent IPOs, on London’s Main Market, in the past two years have outperformed the FTSE100 overall.
Deloitte’s IPO Barometer shows the share price of 10 Main Market trading company IPOs that occurred in 2011 and 2012 rose on average by 19.2% above their listing price by the end of January 2013. The FTSE100 rose by 8.8% over the same period.
A £1,000 investment in each of the 10 IPOs at the time of their listing would have been worth £11,920. The same investment in the FTSE100 would be worth £10,880, a difference of £1,040.
This is a reversal of the position for IPO companies in 2010, where the share price of the 12 Main Market entrants in the year was 41.4% lower than the FTSE100 due to the impact of Eurozone worries on the economy and growth.
John Hammond, head of Deloitte equities capital markets, said: “There is a misconception that IPOs are a bad investment and that it is better to keep your money in already listed stocks. 2010’s results perpetuated this view. Our analysis shows that the picture is changing as recent IPOs have performed 11% better than the FTSE. This is a striking differential and shows that IPO valuations are now being set at a level where investors can make a superior return. Together with a rising FTSE and reduced volatility**, there is a far more positive backdrop for the IPO market in 2013.”
For further information, download our IPO barometer (PDF)
Note to editors:
*Trading IPOs excludes cash shells, investment companies and venture capital trusts.
**The VIX index has been below the benchmark level of 20 at which the market is considered closed since last summer.
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.
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