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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

Plans for investments in UK with confidence high

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Andy jalil -


andyjalil@aol.com -


London is gearing up for huge initial public offerings (IPOs) in the pipeline with the country set to benefit from up to £30 billion of flotations in the coming months. Logicor, O2 and Misys are among a number of high-profile companies weighing up IPOs in the capital city. After a rocky end to 2016, when several deals were pulled due to market uncertainty, 2017 saw a subdued start. But at least six companies, worth an estimated £30bn-plus combined, are at various stages of preparing stock market floats in London this year.


Among other companies, car parts maker TI Fluid Systems, owned by Bain Capital with an estimated value of more than £2.5bn, is one company considering reigniting its float plans after a climb-down last October. Logicor, an £11bn-valued warehouse company owned by private equity giant Blackstone, have appointed bankers Goldman Sachs, Bank of America Merrill Lynch, Citi and Morgan Stanley to oversee a London float, which is likely to come in the second half of the year. Blackstone, however, is still considering selling the company as part of a dual-track process.


UK mobile phone giant O2 was one of the companies to let down the market last year. After its failed bid to merge with a rival company Three, owner Telefonica was seeking to float the £10 billion company in late 2016. Amid market uncertainty, the plans were pushed back and an IPO is anticipated this year.


Tech giant Misys withdrew its IPO plans in October last year, owners Vista Equity Partners remains keen to exit the company, which has been valued at £4.5bn-£5.5bn, and is currently weighing up whether to retry the London float. An IPO on Nasdaq in New York is also being considered, as is a sale.


Elsewhere, Comparethemarket.com owner BGL Group, which is valued at up to £2bn, is lining up a float for the second half of this year. And Kuwait Energy is believed to have appointed bankers as it seeks a value of $1bn (£820m) through a London float. Commenting on the general IPO market in the UK, Mark Austin from Freshfields said: “There is a healthy pipeline of deals. The question is when and where they’ll list.”


IPO leader at EY (Ernst Young) Scott McCubbin said it had been an “exceptionally quiet” start to the year, but added: “There are some decent sized companies looking to float, we do see them in the pipeline.” Kate Ball-Dodd, a partner at Mayer Brown added: “There are many reasons why the London IPO market remains particularly attractive despite news of many companies abandoning plans to float due to the current uncertainty of the political environment.”


With the performance and confidence in the private sector it is of little surprise that the UK seems so inviting for IPOs. Business confidence among the private sector firms recovered to the strongest level since mid-2015 in February, according to new figures. The EU referendum sent the net balance of optimism to a four-year low of 39 per cent last year, but now the index has rebounded to 59 per cent, comparing favourably with other developed markets, data released last week by the Markit UK Business Outlook Survey said.


The sharp rise in the headline index was the largest of any country monitored by the survey except the US. Around 12,000 manufacturers and service providers surveyed said a resilient domestic economic backdrop and improving client demand so far this year had boosted their confidence.


Senior economist at IHS Markit, Tim Moore said: “While a number of firms cited heightened uncertainty about the path to Brexit, it seems clear that these concerns have receded in comparison to the projections reported last autumn.”


As companies become more optimistic and less fearful about the near-term impacts of political uncertainty, they’re expected to increase job hiring and capital expenditure (capex) plans for the year, the survey found.


The number of UK companies forecasting increasing their staff is at its highest since autumn 2015, at 27 per cent in February, up from 19 per cent in October. The balance of companies expecting to increase capex in the year, 13 per cent, was well above the average level seen last year of seven per cent. However, the number is still down from the post-crisis peak in early 2014 of 24 per cent.


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