IPOs outperform FTSE100 over 2011-2012
The share price of companies undertaking recent IPOs on London’s Main Market in the past two years have outperformed the FTSE100 overall, according to research from Deloitte, the business advisory firm.
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 per cent above their listing price by the end of January 2013. The FTSE100 rose by 8.8 per cent over the same period.
A GBP1,000 investment in each of the 10 IPOs at the time of their listing would have been worth GBP11,920. The same investment in the FTSE100 would be worth GBP10,880, a difference of GBP1,040.
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 per cent lower than the FTSE100 due to the impact of Eurozone worries on the economy and growth.
John Hammond, head of Deloitte equities capital markets, says: “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 per cent 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.”
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