Equity capital raisings in the UK - Data and Analysis (2000-2033)

The total amount of equity capital raised is estimated to contract at a compound annual rate 22.3%, to reach £6.4 billion over the five years through 2026-27. Equity capital raisings have generally been much lower than the peak in 2008-09, though that was an exceptional year due to the financial crisis. The total money raised through the LSE began to fall in 2016-17, as equity capital raisings decreased by 20.4% with IPO activity slowing down. The biggest new issue of the year was that of ConvaTec Group Plc, the UK headquartered, global medical products and technologies company, whereby the successful IPO raised £1.5 billion in October 2016. As aforementioned, in 2016-17, the total value of equity capital raising fell by 20.4% to £15.6 billion, as activity in the market was inhibited by uncertainty stemming from the state of the economy after the electoral decision to leave the European Union in June 2016. IPO activity was further hampered by increasing due diligence costs.Although at the beginning of 2017-18, IPOs were in the pipeline for a number of companies, market uncertainty has caused several headline cancellations over the year. Telecommunications firm Arqiva cancelled its £1.5 billion offering at the beginning of November. This decision was replicated by Cabot Credit and M7 Real Estate in the weeks that followed. In October 2018, the flotation of O2 was postponed due to economic uncertainty and low market confidence. Investors have become more selective due to prevailing uncertainty which is expected to be compounded by the extension to the UK's departure from the European Union. In the first three months of 2019, only five companies raised equity capital, which represented the slowest rate since 2009. Nevertheless, the total equity capital raised increased slightly over 2018-19.In 2019-20, this fell again by 12.2% as a number of firms cancelled their IPOs following a number of high-profile flops in global listings. This was compounded in the final quarter of the year, with more cancelations and few issues, as the spread of COVID-19 (coronavirus) caused wide-spread economic uncertainty. One of the largest issues of this year was that of the general retailer, Marks and Spencer, offering over £600 million as a way of raising capital for a new joint venture with online food retailer, Ocado.In 2020-21, this activity rose significantly as firms looked to raise capital to replace mounting debts due to the economic slowdown caused by the coronavirus outbreak and also to raise cash reserves to fight and drop in demand. As a result, the total equity capital raised in 2020-21 jumped by a staggering 148.9% on the previous year. The majority of capital raised had been for further issues rather than new issues. Between April 2020 and March 2021, equity raised by new issues equated to approximately £9.2 billion, whereas equity raised by further issues was roughly £31.7 billion over the same period. On a percentage basis, this is shown by 22.5% of equity raised was from new issues, while further issues accounted for 77.5% over the twelve months through March 2021. The majority of equity raised in 2020-21 had been from firms within sectors struggling from the coronavirus outbreak, such as the catering firm, Compass Group plc, raising over £2 billion in May 2020 or International Consolidated Airlines Group S.A's £1.3 billion offering in September. As total equity capital raised was so high in 2020-21, naturally equity capital raised fell significantly in 2020-21, falling by 44.4% in 2021-22, to £22.7 billion. This is due an improvement in the domestic and global coronavirus pandemic, facilitated by the COVID-19 vaccine rollout which allowed for safe reopening of the economy and a slight economic rebound. Over the year through March 2022, equity raised by new issues equated to approximately £6 billion, whereas equity raised by further issues was roughly £16.7 billion over the same period. On a percentage basis, this is shown by 26.6% of equity raised was from new issues, while further issues accounted for 73.4% over same period. Over the current year, the total equity capital raised is expected to slide by a further 41.3%, to £13.3 billion. This is primarily due to the current volatility and uncertainty within the global and domestic economy and ultimately the stock market. As of March 2022, stock markets across the globe fell and have remained volatile amid the uncertainty and tension between Western countries and Russia. On the morning of 24 February 2022, President Vladimir Putin announced that Russia was initiating a "special military operation" in the Donbas region, and proceeded to launch a full-scale invasion into Ukraine. This then led to various economic and diplomatic sanctions from Western countries, including the UK, towards Russia. These sanctions have been met with threats from Russia and orders my President Putin to place Russian nuclear deterrent forces on high alert. While the global and domestic economic outcome of the Russian-Ukrainian war is uncertain at this stage, it is evident that this will be an influential variable towards capital raisings in the UK. This is because businesses will be indirectly affected by the war and subsequently the economic sanctions, whether it be energy price rises, trade disruption, interest rate hikes and stock price volatility. In addition to the conflict within Ukraine, the UK economy is currently facing surging inflation, supply chain constraints and rising interest rates in order to combat inflation. All of which are likely to compound and weigh on the total equity raised over the current year.