Tech companies looking to go public are raising concerns about the state Britain’s post-Brexit market.
And it comes as telecoms company O2 publicly suggest that it might also call off a planned IPO, with CEO Mark Evans saying that it is “prepared but not committed,” and will decide in 2017.
Shockwaves and uncertainty continue to reverberate through the British economy four months after the vote to leave the European Union. The pound has lost 18% of its value since the June referendum, dropping to 31-year lows, and concerns abound about what Brexit will mean for British jobs, foreign investment, and trade deals.
And when Britain actually goes through with it, the UK Treasury estimates that the “Hard Brexit” scenario Prime Minister Theresa May has indicated she is aiming for could cost the UK £66 billion ($81.2 billion) a year.
Misys builds banking software, and had planned to go public in an IPO on the London stock market that would have raised £500 million and valued it at around £3.5 billion. This is a billion less than originally planned — £4.5 billion — after it slashed its valuation earlier in October.
It’s now bailing out altogether, saying in a statement: “Despite encouraging institutional support Misys Group Limited has decided not to proceed with its potential initial public offering at the current time due to market conditions.”
Right now the future of City of London, and particularly the banking sector, is up in the air, with the boss of the British Bankers Association saying this week that banks have their hands “quivering over the relocate button.” With many banks expected to move some operations out of the UK, Misys — which says it provides services to 48 of the world’s top 50 banks — is thinking again about its IPO.
Interestingly, the Financial Times is reporting that there was a “lack of enthusiasm” from investors in the company — and that its revenues are in decline. While Brexit may have had some impact, then, it could also be a convenient excuse as the company backtracks.
That said, Misys isn’t the only company having second thoughts about going public in Britain. O2, owned by Spanish telecoms giant Telefonica, has said that it will not go public this year, and is considering whether or not it will at all in 2017.
“An IPO is a real and distinct opportunity for this business,” CEO Mark Evans said, The Guardian reports. “It is being prepared for, as opposed to committed to. I’ll draw that very clear distinction. What you’ve seen over the course of the last six to eight weeks is the market going into some flux. Softening.”
Gym chain PureGym and car parts maker TI Fluid Systems have also cancelled plans to float, according to The Telegraph. And when waste management company Biffa went public earlier in October, it did so at a price lower than expected, Reuters reported.
Earlier this week medical supplies company ConvaTec went public, raising nearly £1.5 billion in a float that values it at £4.4 billion, the biggest London listing this year.
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