London stockmarket recruits dwindle

LSE: far fewer companies are signing up

The London Stock Exchange (LSE) has attracted the lowest number of new recruits in a decade.

During the last three months of 2001, only 10 firms floated in London, according to a new survey by the accountants, KPMG.

And the 10 firms had a collective value of just £184m, 93% lower than the market value of the 46 firms that floated in the same period a year ago.

Volatile stock markets and the slumping economy are thought to be the main causes for the slump.

The year 2000 was also characterised by a large number of hi-tech issues coming to market.

AIM cheer

"The Initial Public Offering (IPO) market has been badly hit this year, particularly in the last three months when new issue numbers fell way below any quarterly level we have seen for the last decade," said Neil Austin, head of new issues at KPMG Corporate Finance.

During the whole year, 78 firms floated on the exchange.

But only nine of these were trading companies, with the rest largely consisting of investment trusts or venture capital firms.

The Alternative Investment Market (AIM) - the London market for smaller companies - fared slightly better than the LSE, with 93 new listings during the year.

But AIM firms often do no attract much attention from institutional investors which drive the markets.

Better times ahead

But many market observers are expecting an improvement in 2002.

And KPMG's Mr Austin expects business to be driven by spin-offs and demergers, such as retailer GUS's planned flotation of its luxury goods brand Burberry.

"In the last month, some companies have been making tangible plans for listing, suggesting an upturn in activity by the end of the first quarter next year," said Mr Austin.

"If we see a small number of successful listings in the early part of 2002, this will boost confidence and catalyse others into starting their preparations."