Investors snapped up London’s newly listed technology companies in the second half of 2017, putting to rest concerns that initial public offerings had stalled in the wake of the U.K.’s decision to leave the European Union.
Just one tech company had listed on London’s Alternative Investment Market in the first six months of the year, sparking fears that Brexit was drying up the IPO market. These worries were compounded on when three planned London IPOs were shelved in quick succession last fall, including that of technology company Arqiva, which had explicitly cited “market uncertainty” as the reason for not proceeding with a listing.
But despite the slow start, tech companies ultimately raised £1.2 billion ($1.7 billion) from AIM investors in 2017, up from £290 million the previous year, according to accounting group Moore Stephens.
Dougie Hunter, a director at Moore Stephens, said the AIM market “clearly remains an attractive option” for technology businesses, despite the ongoing discussions over Britain’s departure from the European trading bloc.
“With Brexit on the horizon, it is clear that companies still have faith in the U.K.’s alternative market as their chosen place for exit,” he said in a statement. “Over the next six months, we think the trend for IPOs will continue as demonstrated by the recent £30 million fundraise by OnTheMarket in the last week.”
[II Deep Dive: U.K. Tech IPOs Nearly Halt as Brexit Looms]
According to Moore Stephens, the bulk of the capital raised in the back half of 2017 came from secondary fundraising, which brought in £810 million. The seven tech IPOs launched during the same period raised a combined total of £114 million.
“There is no doubt that the ability of companies to raise significant levels of secondary funds has been one of the factors for the increase in the number of technology IPOs,” Hunter said.
Increasing valuations were also an attraction for technology companies, he added.