IPO alert: Boots, Shein and Raspberry Pi mull London float

One high-profile business has already said it wants to list its shares in London, and some bigger companies could follow, injecting life into the UK’s IPO market.

15th May 2024 15:56

Graeme Evans from interactive investor

Hopes for a busier IPO market over the rest of 2024 have been lifted after Raspberry Pi today declared its intention to float and speculation focused on potential listings by Boots and Shein.

The positive signs, which follow a barren couple of years for stock market debuts, comes at a time when lower valuations have led to a number of mid-cap stocks being taken back into private ownership.

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Assuming no macroeconomic or geopolitical shocks, broker Peel Hunt has said it expects an increasing number of flotations in the second half of the year before a full re-opening in 2025.

Its new IPO speedometer, which gives a score between 0 and 60 based on more than 30 qualitative and quantitative inputs, last month put the new listings market in second gear with a reading of 24 mph.

The City firm launched the speedometer in recognition that IPOs require a lot of planning, as well as a significant commitment of management time and money in their preparatory phase.

It added last month: “Not being able effectively to evaluate whether an IPO window is open, or, more importantly, whether it will likely open/remain open/close in the short term, is a significant issue for private companies looking to float.”

The key drivers of April’s faster IPO speed were an uptick in European IPOs, positive broader UK markets activity and performance, and an improving overall fund flow picture.

The City bank said: “We are some way away from a broad IPO market re-opening but are starting to see a building UK pipeline and a market that is currently open for select issuers.”

This week started with speculation that the Chinese-founded fast fashion chain Shein is closer to announcing plans for a record-breaking $66 billion (£52.3 billion) float in London.

The choice of venue over New York is likely to have been driven by the wider impact of tensions between China and the United States.

It represents a significant boost after Bloomberg figures reported by the Sunday Times showed that London accounted for 2% of the $11.9 billion (£9.4 billion) raised in European floats this year, compared to the 31% average of 2012-2023.

Private equity firm CVC Capital Partners (EURONEXT:CVC) listed in Amsterdam last month, while the owner of Cambridge-based ARM Holdings ADR (NASDAQ:ARM) chose New York for last year’s $55 billion listing.

On Monday, the possibility of a stock market return for Boots was raised when Walgreens Boots Alliance Inc (NASDAQ:WBA) said it was looking for potential buyers for the pharmacy chain.

Alongside talks with would-be bidders, Bloomberg reported that a London listing is also an option for spinning off the £7 billion valued chain.

Today, Cambridge-based Raspberry Pi announced its IPO intention in a move that also provides a much-needed boost to the London market’s tech sector profile.

The maker of high-performance, low-cost general-purpose computing platforms is reportedly set to be valued at £500 million, large enough to give it a place in the FTSE 250.

It began trading in 2012 and has sold over 60 million units for industrial internet-of-things purposes, as well as to enthusiasts and educators in markets worldwide. The 7.4 million sold in 2023 led to revenues of $265.8 million (£210.5 million) with gross profit of $66.million (£52.3 million).

The company is a subsidiary of the Raspberry Pi Foundation, a UK charity founded in 2008, with the goal of promoting interest in computer science among young people. It has distributed approximately $50 million in dividends to the charity since 2013. Other strategic shareholders include Sony and Arm.

This will be the company’s second attempt at a stock market float after a previous listing move in 2021 was scuppered by the impact of the global semiconductor shortage.

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