8 Upcoming UK IPOs You Won’t Want to Miss in 2021

An initial public offering (IPO) occurs when the shares of a private company are first listed on a stock exchange. An IPO forms one of two main options for entrepreneurs and investors looking to exit from a high-growth business, the other being an acquisition (when a company sells a majority of its existing shares to another company or a fund). Exiting allows a company’s shareholders to realise the value of their shares. 

Successful exits are an important component of the high-growth ecosystem, proving that startups are a valuable source of wealth generation and capital growth, and hence ensuring that new companies are created. Often once an entrepreneur has generated personal wealth, they also often feed it back into the ecosystem as an angel investor, and may go on to found further ventures. 

Back in October, we reported that the number of exits by high-growth UK companies had seen 160% year-on-year growth between 2011 and 2018, reflecting the ecosystem’s increasing maturity. 2019 saw a slight dropoff in exit numbers, falling 5.5%, likely due to uncertainty surrounding the health of public markets amidst Brexit negotiations and the General Election. But what about UK IPOs specifically? And how have they fared during the pandemic? We explore the latest data on IPO trends in the UK’s high-growth space, and determine which companies are likely to go public in 2021.

IPOs trends in the UK

Activity peaked in 2014, at 25 IPOs by high-growth UK companies across the year, and remained relatively high between 2015 and 2018, with at least 18 IPOs each year. 2019 saw just nine high-growth IPOs, however, falling 59% from the year before—10x the overall decline in exit numbers in 2019. This number has since rebounded to 13 IPOs in 2020, despite the arrival of COVID-19, but is still far off its earlier levels. Whether it will ever return to such heights in the UK is unclear, with many companies now steering away from the once-popular IPO route.   

The IPO market has changed significantly over the past two decades. Whilst IPOs have typically been the go-to for high-growth companies needing to raise large sums of money, the influx of capital into the private market in recent years has meant businesses needn’t go public so soon. Although there’s a lack of liquidity in private markets, there are several benefits of being a private company, including facing fewer regulations than publicly-listed companies, and being accountable to fewer shareholders. 

Looking specifically at tech IPOs, BDO research shows that less than 4% of the UK’s fastest-growing tech companies have IPO’d on the London Stock Exchange (LSE) over the past 20 years, instead opting for foreign markets such as NYSE or Nasdaq. It emphasises why proposed listing reforms, as set out in Lord Hill’s UK Listing Review, are desperately needed to allow more people access to these innovative businesses.

Alternative exit routes

The majority of high-growth UK exits are made up of acquisitions rather than IPOs. Acquisitions of ambitious UK companies have also seen much higher and steadier growth over the past decade, despite still dropping off slightly in 2020. But even for businesses set on going public, many have opted for alternative exit routes which are typically quicker and less regulated, as IPOs can take several years to complete. 

One such alternative is a ‘direct listing’ which involves selling existing shares to the public instead of issuing new ones. Notable examples include Metro Bank which chose a direct listing on the London Stock Exchange Main Market in 2016, as well as Spotify (2018) and Slack (2019) which did so on the New York Stock Exchange. 

Another increasingly popular option is SPACs (Special Purpose Acquisition Companies), shell companies set up for the sole purpose of raising money, listing on a stock exchange, and acquiring private businesses through a reverse takeover. EMMAC, a medical cannabis and CBD wellness brand, announced its intent to go public via a SPAC last year, whilst electric vehicle startup Arrival is also expected to complete its merger soon with the SPAC CIIG. 

Despite this shift away from IPOs, however, some UK businesses are still opting for the traditional approach to going public. E-commerce giant The Hut Group, for instance, raised a massive £920m from their IPO last year, having listed on the London Stock Exchange in September. Plus, we’ve already seen four IPOs by high-growth UK companies this year: first from battery, lighting, and vaping wholesaler Supreme in January, then Immunocore in February which saw it raise £189m ($258m), followed by Virgin Wines and AMTE Power so far this month. 

Which companies are most likely to IPO?

Using the Beauhurst platform, we’ve previously looked at the average stats of companies that IPO, to determine the type of businesses most likely to do so in the future. We’ve now updated the figures, to include all 150 IPOs completed by high-growth UK companies since 2011. And since there’s a large amount of variation in the sample, we’ve also identified the median values for these stats. 

Prior to an IPO, the average high-growth UK company is 16 years old, has between 100 and 249 employees, and is valued at £118m. It has secured roughly £57m in fundraisings, across four rounds, the most recent of which was worth £24.2m. Whereas, the median high-growth UK company is 11 years old, has between 100 and 249 employees, and is valued at £27.7m. It has secured £10.2m in fundraisings, across three rounds, the most recent of which was worth £3.2m. 

The youngest high-growth UK company to IPO was just 10 months old (Immotion Group), whilst the oldest had been around for 224 years before listing (Watkin Jones Group). Meanwhile, the employee count of these businesses has ranged from just 5-9 employees to more than 1000, and amount raised from as little as £28k to as much as £986m, whilst pre-IPO valuations have been between £213k and £2.37b (The Hut Group).

Upcoming IPOs in 2021

Last year’s bounceback in IPO numbers bodes well for 2021. We could soon be hearing several more announcements from UK startups planning to IPO this year, including some that may have put their plans on the backburner during the pandemic. Globally, January was the best month for IPOs on record, and Tom Johnson, Head of Equity Capital Markets (EMEA) at Barclays, has said that H1 2021 has the “potential to be the busiest first half for quite a few years in the UK”. 

Through the Advanced Search feature on the Beauhurst platform, we’ve built a list of companies that are likely to IPO this year. Each of them are at a typical stage in growth of a startup approaching an IPO, and are rumoured to be considering listing soon. From this, we’ve selected eight ambitious companies (many of which are already unicorns) as ones to watch in 2021…

Earlier this month, Deliveroo announced plans to list on the London Stock Exchange. Despite reporting an overall loss in 2020, it’s said to be targeting a somewhat controversial valuation of up to £8.8b (which would make it the largest London stock market debut in almost a decade). 

The food delivery giant is backed by billions of pounds worth of equity finance and big name investors like Amazon, Index and Accel Ventures. It made its long-awaited announcement just a day after Rishi Sunak backed recommendations from the Hill Review. And it’s giving retail investors a piece of the action, expecting to make up to £50m of shares available specifically to its customers. We chose Deliveroo as our top pick of candidates likely to IPO in 2020—we were just three months ahead of the game is all.

Pension provider PensionBee has just revealed its plans to IPO on the London Stock Exchange, with an estimated market value of £350m. The B2C fintech company enables users to transfer their old pensions into one plan, which they can then track, monitor, set up new contributions to, and withdraw from online.

PensionBee has secured eight funding rounds to date, worth a total of £40.1m. Like Deliveroo, the company plans to sell shares to its 130k active customers, alongside institutional investors—more than 8k have already registered their interest through PrimaryBid.

Darktrace is a digital security company and University of Cambridge spinout. It was the first to develop an AI system for cybersecurity, with software that identifies behavioural anomalies and alerts clients to potential threats. 

Darktrace is next in line to IPO this year, eyeing up a £4b float in London (which is claimed to be “firmly on-track”, despite UBS pulling out as one of its lead brokers for compliance reasons). The company has secured £173m in equity fundraisings to date, across nine funding rounds, and has been valued at over $1b since September 2018.

Wise (the fintech previously known as Transferwise) rebranded last month, because they’re now “so much more than transfers”. Whilst not a challenger bank per se, Wise has set out to ‘fix’ international banking, by providing consumers and SMEs with instant international money transfers (using real exchange rates), multi-currency direct debits, debit cards, and more. 

Having already secured 10 equity funding rounds, raising £305m in total, Wise’s London IPO is expected to take place at some point this year. Reports indicate that the company has appointed Goldman Sachs and Morgan Stanley as joint coordinators for the listing.

Babylon leads the AI-based healthcare market, enabling patients to discuss symptoms with a virtual nurse, book and conduct remote video consultations with a GP, and order prescriptions via its app. Babylon’s online services are offered in partnership with the NHS, and it’s seen a surge in demand during the pandemic. 

It was reported in February that the company was considering a US listing, which could see it valued at more than $4b, and that it had also been contacted by several SPACs. Whilst the company hasn’t announced any plans to IPO just yet, its latest £454m fundraising (in August 2019) has been supporting Babylon’s expansion into Asia and the US.

EG Group (also trading as Euro Garages) is a Blackburn-based company, first founded by brothers Mohsin and Zuber Issa with the acquisition of a single petrol station in 2001. EG Group now operates over 6,000 sites, and a range of third-party retail brands within them, including KFC, Subway and Carrefour. 

The group boasts a global portfolio of service stations, spread across 10 countries in Europe, Australia, and North America. It’s made five acquisitions in the last three years and, despite taking a hit from the pandemic and lockdown, recently named Stuart Rose, former CEO of M&S, as a non-executive chairman for the group. Whilst nothing’s been decided just yet, this latest move has fuelled rumours that the firm is preparing to IPO.

Also tipped to IPO soon is Onfido, a SaaS startup using AI and facial biometrics to help businesses (including big names like Revolut) carry out background checks and onboard their customers securely. Onfido has raised at least £175m in equity investment so far, across 10 funding rounds. 

In November last year, it was announced that Husayn Kassai would be stepping down as the company’s CEO, to be replaced by Mike Tuchen, to facilitate Onfido’s move towards an IPO. As Kassai put it, he’d taken the company from 0-1, but “it’s now the team’s job to go from 1-100”. Meanwhile, Tuchen hinted that when Onfido does IPO, it will list “most likely on one of the U.S. exchanges.”

Aberdeen-based brewery and retailer BrewDog was founded 14 years ago by James Watt and Martin Dickie, and claims to have been the catalyst for the craft beer revolution. Brewdog is also Scotland’s only active unicorn, having joined the herd of billion-dollar companies in April 2017.

To date, the company has raised £298m, across 14 funding rounds—its latest fundraising, in November last year, was an £8.68m equity investment, at a pre-money valuation of £1.84b. Having already expanded into the US and Australian markets (craft beer hotel anyone?) and previously suggesting that an IPO was in the works, 2021 could well be the year. And with the way things are going, we’d expect an IPO valuation even crazier than their PR stunts.