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Equity Capital Markets - H1 update 2021

Equity Capital Markets - H1 update 2021


Welcome to our ECM H1 update 2021. In 2020 we saw something of a game of two halves: H1 witnessed a huge increase in secondary offerings with issuers racing to raise funds as the pandemic took hold, and H2 saw an unexpected boom in IPO activity. This momentum increased during H1 2021, with both Q1 and Q2 smashing recent records for both deal numbers and proceeds.

In this publication, we look back at the headline key trends from the first half of 2021, as well as looking forward to what we can expect from the second half of the year. As always, Travers Smith partners have had direct insight into many of the recent deals and would be delighted to offer guidance on future transactions.

During this period of recovery, our ECM team has played a leading part, representing issuers and underwriters on five IPOs on the Main Market and AIM during 2021, following a strong 2020 in which we acted on eight IPOs and over 20 secondary fundraisings, and we are seeing a strong pipeline of transactions for the rest of this year.

Andrew Gillen, Head of Corporate M&A and ECM

UK overview

The good news…

As illustrated in our ECM 2020 review, after an inevitably quiet start to the year, with the far-reaching effects of the COVID-19 pandemic still impacting global markets, risk appetite for IPOs returned in H2 2020. The increased level of activity has continued well into 2021, resulting in Q1 and Q2 becoming the best first and second quarters respectively for IPOs for the past 20 years.  

On the London Stock Exchange's Main Market, by the end of 2020, IPO activity had increased by 27% on the previous year with two-thirds of the year’s deal activity taking place during Q4 2020 as the markets rallied following several months of pent-up demand. IPO volume on AIM increased by 60% in 2020 compared to 2019.

Similarly, H1 has been a very active period with the LSE hosting 49 IPOs, raising over £9bn, and total new issues raising over £27bn1, making it the LSE's best half year for IPO fundraising since H1 2014. Its largest IPO was Deliveroo plc which raised £1.5bn. Secondary issues on the LSE's markets raised approximately £12bn2.

IPOs on the London Stock Exchange in H1 2021
c. £12bn
Secondary issues raised in H1 2021

In the Main Market space, H1 has seen 26 IPOs (24 more than in H1 2020), raising total net proceeds of approximately £8.5bn, including £3.2bn of new money. Ten of these were premium listings and 12 were standard, with the remaining four being listings on other segments, namely the specialist fund segment, the high growth segment and the GDR segment. Secondary issues raised proceeds of around £8.5bn3.

AIM has also bounced back and continues to be the world’s leading growth market. The activity witnessed in Q4 has continued in H1, despite some signs of volatility, with 23 AIM IPOs raising net proceeds of approximately 0.7 billion, including £323m of new money. Whilst in H2 2020 there were no companies valued at over £200m that were admitted to trading on AIM, in H1 2021 there have been three companies in this category: tinyBuild, Inc., musicMagpie plc and Victorian Plumbing Group plc, with the latter having a market capitalisation on admission of £850m and being AIM's biggest ever listing, with a placing that raised gross proceeds of £297.5m, including £285.9m of proceeds for existing shareholders. H1 also saw AIM's highest level of daily trading in its 26-year history, and secondary issues of approximately £3.5bn.

The global backdrop tells a similar story: the first half of the year has seen 1,070 IPOs with total proceeds of US$222bn4: the first time that the US$200bn threshold has been exceeded during the first half of any year. Global IPO volumes increased 150% year-on-year and proceeds rose by 215%. ECM deal flow has comprised a broad range of sectors, but the stand-out sector has been technology, which has been the leader for the fourth consecutive sector, accounting for over a quarter of all H1 IPOs: there have been 284 tech IPOs raising US$90.2bn. This trend has been fuelled by increased investor appetite for digital companies and the broader shift towards online consumers during the pandemic. The next most popular sector was healthcare, accounting for 17% of H1 IPOs, with 187 IPOs raising US$33.4bn.

With Brexit having settled down, the European IPO markets have returned to life, with Amsterdam, Frankfurt and London posting some of the largest IPOs in H1 2021, with the top five IPOs all over €1bn. As in the UK, Europe has witnessed the strongest activity in recent history: with 227 IPOs (a 383% increase from 2020) raising $46.6bn (a 509% increase from 2020).

London has maintained its dominant position, being Europe’s most active exchange by a considerable margin, raising 55% more equity capital than its nearest European rival and being one of the world’s four most active exchanges. On a global level, it remains in third place behind the US and China for funds raised via IPO.

But not quite out of the woods yet…

Despite the boom, many uncertainties remain on the horizon, which are contributing to the fragility of investor sentiment including varying stages of vaccination programmes across the globe; new variants of the virus which, despite the lifting of restrictions, remain a threat to a continuing return to some form of normality; and the lingering impact of the pandemic continuing to affect the most hard-hit sectors such as retail, tourism and hospitality. There are also signs that some of the pandemic darlings (such as Netflix in the US) may be stalling in growth terms. Post-Brexit, there is continued uncertainty as to the ongoing relationship with the EU and recent events in Afghanistan illustrate increasing international tension.


1 LSEG statistics: new issues and IPOs

2 LSEG statistics: further issues

3 LSEG statistics: further issues

4 Global figures in this paragraph reported by Ernst & Young's report Global IPO trends Q2 2021 (figures exclude SPACs)

IPOs: H1 in numbers

26 Main Market IPOs in H1 2021

Aggregate market cap on admission – approx. £26.6bn.


23 AIM IPOs in H1 2021

Aggregate market cap on admission - approx. £3.101bn.



Recent IPOs: July 2020 - August 2021

This data has been sourced from LSEG.

Red text denotes the IPOs Travers Smith has advised on.


A closer look: IPO trends

Some of the recent trends we have witnessed have been accelerated by the pandemic, and others can even be said to be a direct result of it. It remains to be seen which trends are here to stay for the longer term, especially as we await the outcome of consultations on various aspects of the listing regime, but we set out our picks and predictions below.


H1 saw IPOs across a range of sectors, with a raft of technology-focused listings (including digital services, fintech, biotech and e-commerce) fuelling optimism for a new direction for the UK markets. 

Premium v standard

Standard listings emerged as a popular option in 2020 with 66% of Main Market IPOs, introductions and transfers from AIM, comprising a listing on the standard listing segment as opposed to the premium listing segment. This included 2020's largest IPO: The Hut Group plc.  In H1 2021, this trend has slowed down, but more companies still opted for a standard listing than a premium listing.  Standard listings are currently under the spotlight following Lord Hill’s UK Listing Review report which recommended a rebrand and re-positioning of the standard listing segment (see below) and the subsequent FCA consultation on the effectiveness of the primary markets which discusses four possible models for the listing regime.  This review is shaping up to be quite far-reaching in potential scope: in the interests of being globally competitive, some players on the sell-side are pushing for a single segment closer to standard listing; on the buyside there are some vocal advocates for the "gold standard" status quo. Whilst we do not yet know what the new listing regime will look like, it is likely that the popularity of standard listings will continue to stall until we have clarity on the new structure. The FCA hopes to announce the new rules by "late 2021".

UK v overseas issuers

In H1 2021, over two thirds of the Main Market issuers have been UK issuers, the rest being from the Channel Islands, the Isle of Man, Australia and the BVI. Similarly, 18 out of the 23 AIM IPOs have featured UK issuers, with the others being from Ireland, the US, Canada and Jersey. It is hoped that the new rules resulting from the consultations referred to above will increase the number of overseas companies listing in London. With Brexit prompting a fresh examination of the UK listing regime (and, in particular, a drive to tailor it to meet the needs of the UK market), and in the wake of critics accusing London of having lost its appeal, we are likely to see a radical shake up of the prospectus and listing regimes following the recent FCA and HM Treasury consultations.

SPAC down to earth

In the first quarter of 2021, global IPO activity was fuelled in large part by the continuation of 2020's US SPACs boom. The money raised by SPACs in that quarter was more than 60% of that raised in all of 2020 when SPAC IPOs represented over 50% of the total number of IPOs. In the second quarter, there was a sharp decline in US SPAC activity but proportionally a vast increase in European SPAC activity (from a tiny base). The European SPAC rally lasted into July.

Of the 27 European SPAC listings in the last 12 months, over half have listed since June. The late surge in European SPAC listings has partly been driven by demand, but more driven by the length of time it has taken to get European regulators to approve prospectuses for these vehicles. That pushed Q1 deals into Q2 and early Q2 deals into closing just at the start of the summer.

The headwinds which have stalled SPAC fundraising in the US (recent poor share price performance after recent deals and increased scrutiny on the part of US regulators, which have suggested some SPACs have not accounted for their warrants correctly and queried the use of forecasts for future earnings) do not apply to the European markets. That said, the fact that some of the recent fundraises look to have been at the bottom of the target fundraising size implies that the US boom has not been exported to Europe.

Unlike the US, the UK has never really had a set of rules which applied purely to SPACs, but the FCA had longstanding guidance that required trading in SPAC shares to be suspended once a de-SPACing transaction is announced. The mere fact that trading might be suspended prevented the typical US-based SPAC investors from investing in a London-listed SPAC as the financing arrangement which those hedge funds use require that the shares they acquire remain traded (or, more precisely, that the collateral they are required to post against untraded shares they hold is significantly greater than that which they typically post). The AMF in Amsterdam had given the opposite guidance, hence why in this recent wave of SPAC listings, Euronext Amsterdam has been the most popular market in Europe.

That significant barrier to SPACs listing on the London markets has now been removed for SPACs which meet certain criteria laid down by the FCA: broadly those which raise at least £100 million, hold money raised in a trust or escrow account, require a resolution of shareholders to approve making their acquisition and which have a fixed period of 2 years to do their deal (extendable by six months in certain circumstances). The fact that only certain categories of SPAC should benefit from this change of guidance is illogical, but is fundamentally a policy decision.

The jury is currently out as to whether the change will allow London to join the SPAC rush or if the number of SPAC listings will continue to grow in Europe. If there is a flurry of activity in the autumn, then it could continue to the end of the year. The speed with which SPACs can be established and gain a listing in London as opposed to other European markets could well be the driver for the growth of a London SPAC market.


Environmental, social and governance ("ESG") considerations continue to be a hot topic in 2021, with the rise of sustainable or "impact" investing increasingly taking centre stage. Investors are focussing on sustainability issues while making their investment decisions and demanding more of listed companies in terms of their ESG credentials, with a much greater emphasis on sustainable business strategies. Issuers are also subject to more stringent ESG reporting requirements. Main Market companies are already required to include reporting in line with the recommendations of the Taskforce on Disclosures ("TCFD"). The FCA has recently consulted on extending these requirements to certain standard listed companies for accounting periods beginning on or after 1 January 2022, and the government intends to widen the scope of such reporting across the economy by 2025, with a significant portion of mandatory requirements to be in place by 2023.

To B or not to B?

There is now a community of over 4,000 Certified B corporations (or "B Corps" for short) across 77 countries. Well known B corps include Helios Investment Partners, TowerBrook Capital Partners, Ella's Kitchen, Innocent, Pukka, and Patagonia. S4 Capital is also working towards B Corp status. B corps are businesses "meeting the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose", and the aim of a B Corp is to redefine success in business and build a more inclusive and sustainable economy. In order to become a B Corp, a business must undergo an assessment of the impact on its workers, customers, community and the environment. The business must be able to demonstrate that:

  • it generates the majority of its revenue from trading;
  • it competes in a competitive marketplace;
  • it is not a charity; and
  • it is not a public body or otherwise owned by the state.

As we are witnessing such a heightened focus on all things ESG, it is not surprising to see B Corps gaining traction: becoming a B corporation is a way for companies to send a strong signal to their stakeholders that having a positive impact is a focus for them both now and in the longer term. For further details, see our client note on this topic.

No (corner) stone left unturned

The recent rebound in UK and European IPOs has brought with it a rise in the prevalence of cornerstone investors, something that has been an important feature of Asian capital markets for many years. Issuers to announce recent UK listings backed by cornerstone investors include The Hut Group, Trainline, Trustpilot, Network International, Moonpig, Dr Martens, Auction Technology Group and

Cornerstone investors are typically large institutions which agree to subscribe for or purchase a minimum value of shares as part of a company's IPO offering in advance of the formal roadshow. Bringing such investors on-board allows an issuer to gather real momentum behind its IPO, generating positive sentiment and PR, as well as helping to de-risk the IPO process. Whilst there can be drawbacks to using cornerstone investors, particularly if they are given too large an allocation, in most cases the positives will outweigh the negatives.

Whilst there are broader macroeconomic factors helping to supercharge this emerging trend, as issuers, underwriters and the UK and European market more generally become increasingly familiar with the benefits of cornerstone investors, we expect them to be an increasingly common feature of the UK and European IPO market.

For further details on the advantages and potential risks of using cornerstone investors, please see our briefing note on this topic. It seems that this trend, so far seen exclusively on Main Market deals, is now reaching AIM: Revolution Beauty Group Ltd has recently announced an AIM IPO with Jupiter Asset Management and Chrysalis Investments Ltd as cornerstone investors.

Direct listings

In the first week of H2, the IPO of London-based money transfer Fintech company Wise took place and was notable for two reasons: firstly it was a "direct listing", where no new funds are raised, and secondly, it is the largest ever tech listing in London. Although the US has seen direct listings of some high-profile companies such as Spotify and Slack, this is a significant move for the UK, whose government has been trying to make its markets more attractive for fast-growing tech businesses. Wise also considered Amsterdam and New York but is reported to have decided on London because of the existing infrastructure to facilitate a direct listing and its access to a global investor base.

Although for a long time the LSE has allowed companies to be “introduced” without raising capital, introductions are usually seen only on demergers or secondary listings. A direct listing can be seen as a specialised form of introduction. Wise is the first technology company to have a direct listing in the UK and the largest company in over two decades to come to market without being listed elsewhere or separated from a group.

It remains to be seen whether Wise's direct listing will kick-start a new trend, but we do not anticipate the IPO declining in popularity given its tried and tested status.

For further information, and for the pros and cons of a direct listing as opposed to a traditional IPO, please see our client note on this topic.

Secondary offerings

Following the dramatic increase in secondary offerings seen in 2020, H1 has continued to be active, with secondary issues raising approximately £12bn5. On the Main Market, issuers have raised approximately £8.5bn in secondary offerings6 and on AIM, secondary issues raised approximately £3.5bn, representing an increase on H1 2020. Again, the great majority of secondary fundraisings were by UK issuers.

Value: all secondary issues


Offering structures

Offers over £10m by volume:


Sector focus

The sectors raising most secondary funds in H1 2021 included consumer, household and retail sector (including travel and leisure) and pharmaceuticals and healthcare, reflecting the continuing impact of the COVID-19 pandemic.



Cash box placings7

There were 12 cash box placings in H1 2021 (eight on the Main Market and four on AIM), which is similar to the number in H2 2020. The first half of 2020 saw 38 cash box fundraisings, attributable to the urgent need for funds and the difficulty in holding general meetings early in the pandemic. Numbers of cash boxes were bolstered during this period by the Pre-Emption Group's relaxation of its guidelines, effectively blessing non-pre-emptive issues of up to 20% of issued capital without the need for specific shareholder approval.

Despite the withdrawal of this relaxation from December 2020, cash boxes are still more frequent than in the years preceding the pandemic, reflecting the current need for speed and certainty when raising funds. However, issuers will need to consider the pre-emption guidelines and the likely reaction of shareholders when considering non pre-emptive issues.

Retail offers via Primary Bid

24 offers8 made use of PrimaryBid's platform which allows retail investors to participate in otherwise institutional offers at the same discounted rate as the institutional placees. PrimaryBid's model involves allowing issuers to include retail investors without the requirement for a prospectus, relying on the EUR 8m exemption under the Prospectus Regulation.


5 Figures derived from LSEG statistics for H1 2021.

6 As above.

7 Figures derived from Practical Law What's Market. Figures include fundraisings over £10 million by AIM and premium listed commercial companies.

8 As above.

Legal and regulatory developments

Hill review of UK listing regime

The recommendations of Lord Hill's UK Listing Review, published at the beginning of March, were aimed at boosting the attractiveness of the UK markets for companies choosing to raise capital, and look at the efficiency and competitiveness of the post-Brexit UK listing regime. The proposals included:

  • facilitating the provision of forward-looking information;

  • allowing companies with dual class share structures to list in the premium listing segment commendations aim to further increase the attractiveness of the London markets as a leading venue for listing, especially in the technology sector;

  • rebranding the standard segment, including renaming it (one suggestion being the "Main Segment") and allowing it to be eligible for the FTSE indices;

  • lowering the free float requirement;

  • redesigning the prospectus regime;

  • empowering retail investors; and

  • reviewing the IPO rules on unconnected analyst access

For further details, please see our briefing note on the review.

As a result of the Hill Review, and given the new ability to diverge from EU law, the Treasury and the FCA published two major consultations in July proposing significant changes to the Prospectus and Listing Regimes.

Radical prospectus reform

The Treasury is planning a radical overhaul of the rules governing public offers of securities and prospectuses in the UK, and published a consultation in July which closed earlier this month. Even to the staunchest remainer, the proposals appear to remove some of the less logical constraints imposed by the EU Prospectus Regulation, minimising legislation and allowing the FCA freedom to act more nimbly in deciding when a prospectus is actually necessary, and when investors are adequately protected by market information or other means. For details of the proposals, please see our client note on this topic.

Markets effectiveness review

The FCA has also recently consulted on the effectiveness of the primary markets. The FCA is looking firstly at ways of improving the efficiency of the listing regime (with four different listing models being discussed) and secondly at targeted changes to remove barriers to listing, with its main aim being to "ensure that the UK remains an attractive place to grow and list successful companies". It hopes to make final rules by late 2021 to give certainty for listed companies considering funding rounds in Q1 2022. For further details, please see our client note on this topic.

SPACs rule changes

In April 2021, the FCA published a consultation paper on proposed changes to aspects of the Listing Rules that apply to SPACs and it recently announced the outcome of that consultation - this followed Lord Hill's UK Listing Review which, as mentioned above, recognised the need to open up the UK markets as a viable listing venue for SPACs, and recommended revising aspects of the Listing Rules that require trading in the shares of SPACs to be suspended on announcement of a potential acquisition.

The FCA's rule changes took effect on 10 August 2021. There is now an alternative route to market for SPACs demonstrating higher levels of investor protection; subject to certain criteria being met, the presumption in the Listing Rules that the listing of a SPAC will be suspended when it identifies a potential acquisition target has been removed. The FCA has introduced guidance stating that it will be generally be satisfied that a suspension is not required where a SPAC:

  • has certain features built into its structure that provide investor protections; and

  • provides adequate disclosures to the market to mitigate key risks for investors.

The FCA's aim is to provide a more flexible regime potentially resulting in a wider range of SPACs listing in the UK, as well as increased choice for investors, and its proposals will put the UK regime on a similar footing to the regulatory regimes of competing financial centres such as the US. However there are concerns that the residual risk of a trading suspension will be too toxic to attract the necessary hedge fund investor appetite.

More climate-related disclosures

Premium-listed companies are already under an obligation, in relation to financial years beginning on or after 1 January 2021, to state whether they comply with the recommended disclosures of the Task Force on Climate-related Financial Disclosures ("TCFD") and to explain any non-compliance. In April 2021, the government published a consultation on proposals to require other large organisations to disclose their climate impact in line with the TCFD, as part of existing non-financial reporting obligations. As well as all Main Market companies, the proposed scope includes AIM companies with more than 500 employees, as well as unlisted UK companies and LLPs with more than 500 employees and a turnover of more than £500m. Regulations are expected to be made before the end of 2021, to enter into force on 6 April 2022. For further details, please see our briefing note on this topic.

The FCA has also recently consulted on extending climate-related disclosures to certain standard listed companies (excluding standard listed investment companies and shell companies).

Looking forward: what can we expect from the rest of 2021?

As we have seen, IPOs have got off to a record-breaking start in 2021, both in the UK and globally, and there are positive signs that this will continue. Anecdotally, and looking at our own mandated IPOs, there is a massive pipeline of UK IPOs that are timetabled to hit the markets in Q3/4 2021 and into 2022. We are seeing bankers looking to accelerate timetables where possible so as not be at the back of the queue. The difficulty in getting expert reports commissioned and, on occasion, securing reporting accountants is indicative of the extraordinary levels of IPO activity.

As always, there is a prospect of congestion where there is still great demand, but fund managers have to choose which meetings to take by reference to their own bandwidth. The COVID-19 move to on-line presentations has created efficiencies in this process, but we do anticipate an increasing need for IPO 'teasers' being needed to secure meetings.

At the time of writing, the UK has largely lifted the full suite of COVID-19 restrictions but has one of the world's highest numbers of infections. Whilst for now markets seem still to be taking heart from the UK's high levels of vaccination and relatively low hospitalisation rates, some countries are tightening, rather than loosening, restrictions and it remains to be seen whether buy-side demand may be dampened if confidence levels change.

The tech IPO boom looks set to continue, although we also anticipate more traditional companies starting to explore IPOs again. Investor sentiment is likely to remain high for those sectors that have prospered during the pandemic, including e-commerce, food delivery and games, whereas challenges remain on the horizon for companies in the sectors most badly affected by the events of the past 18 months, including retail, travel, tourism and hospitality.

As regards the trend in cornerstone investors, we anticipate that it will grow, in large part due to increased awareness and the need for a new public offering to differentiate itself in a crowded IPO market. To date, the rise of cornerstone investment in UK IPOs has only gone as far as the Main Market. Historically, whilst AIM IPOs may have had cornerstone investors, they have rarely been marketed as such to the market and have instead been used almost exclusively as a method of de-risking the bookbuilding process. However, despite the typically smaller capitalisation value of AIM companies and the loss of privacy through disclosing a proposed IPO publicly before it is strictly required, we believe that there is scope for AIM IPOs to capitalise on the enhanced publicity provided by securing cornerstone investors and enabling confident and larger AIM applicants to send a clear, positive message to the market: this has been borne out by the recent announcement by Revolution Beauty Group Ltd of its IPO backed by cornerstone investors.

In the longer term, it will be interesting to see how the recommendations of Lord Hill's UK listing review will impact the current cornerstone investment trend, given Lord Hill's call for a review of the IPO rules on unconnected analysts, which helped to drive the initial spike in cornerstone investment. If a review ultimately removes the market practice of publishing a registration document prior to a prospectus, this is likely to slow the rise of the cornerstone investor, but the benefits are now well understood by the market and we believe that this is a concept which is here to stay.

Retail investment

Following the growth in retail investment in public offerings as a result of Primary Bid's model, and the emphasis on retail access to the markets in the recent prospectus consultation, it is likely that retail participation will continue to grow in 2021 and beyond.

Our ECM experience

Regularly acting for high-profile corporate issuers, as well as some of the most active investment banks in the capital markets, Travers Smith is consistently viewed as a market leader in its ECM expertise. Travers Smith’s Equity Capital Markets team has been at the forefront during these uncertain times, supporting corporate issuers and investment banks on multiple transactions.

Travers Smith has an eleven partner team dedicated to listed company support, with an uncompromising focus on client service and quality control.

On IPOs and secondary fundraisings we regularly act for:

  • Corporate issuers
  • Sponsors and Nomads
  • Brokers and underwriters
  • Selling shareholders
  • Management teams

The team is also active in sponsor support, providing coverage for RTOs, Class 1 transactions and related party approvals.

US securities law capability

Our embedded US Securities law team regularly provides crucial support to every fundraise, including Rule 144A/10b-5 coverage. Throughout H2 2020 and H1 2021, we advised on four Rule 144A/10b-5 IPOs, including the $1.1bn Main Market IPO of Conduit Holdings, the £646.6m Main Market IPO of Bytes Technology Group and the £455m Main Market IPO of Foresight Group Holdings.

Our recent IPO experience


Key contacts

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