IPOs have been a hot topic in 2021. The likes of Deliveroo, Kanabo, Coinbase, and Darktrace are just a few worth mentioning over the past couple of months. There are also several potential UK IPOs that could go public later this year.
Buying in straight away into a newly listed company isn’t a sure way to make money. The initial price should reflect an accurate valuation of the company, but this is not an exact science. As a result, the first few weeks can see large moves in the share price. But after it has settled down, having the ability to buy into a stock I believe in for the long term is great now that it’s public.
Brewing for a change
Several large private companies might look to go public this year. One of these is BrewDog. The UK-based beer producer has grown significantly in recent years.
It has remained in private hands but has done several funding rounds to raise capital. In fact, only last year the business crowdfunded several million from retail investors. The co-founder, James Watt, was quoted as saying that this would be the last funding round as the business was in discussions about an upcoming IPO.
In 2019, 25% revenue growth saw the business post a profit of £1.15m. However, accounts for the first half of 2020 show that these gains were completely wiped out by the pandemic. The closure of bars and restaurants saw BrewDog slump to a loss of £8.1m for this period.
The impact of the pandemic may push back the IPO, given that the company will want to secure a high valuation at the point of going public. When the time is right, I would be keen to invest, as I think the pandemic impact is just a blip.
An upcoming UK banking IPO
Another potential upcoming IPO is Starling Bank. The challenger bank was only set up in 2014, and is a fully licensed and regulated. It focuses on disrupting traditional banking channels, mainly via technology and mobility.
Late last year, the CEO Anne Boden commented that “I’ve always said that I didn’t do this to sell to a big bank, and nothing’s changed. We still have our sights on an IPO.”
This IPO could be later this year, given the fact that the company has moved into profitability. In a trading update in November last year, annualized operating profit came in at £10m. It isn’t huge when compared to other UK banks, but Starling is growing quickly. Revenue in October 2020 was four times that of the same period a year ago.
I have a positive outlook on UK banking in general going forward, and think that the worst of the impact from the pandemic is over. So if we did see Starling as an upcoming UK IPO, I’d be very interested in buying.
Overall, there’s plenty to be excited about for upcoming UK IPOs. I’ll have to wait for more details of the two above, but am keeping myself ready.