Adviser cheer as City float boom builds momentum with a string of major IPOs

Retail IPO surge on back of increasing confidence

Capital markets partners attest to an end to the jitters that have until now dogged the initial public offerings (IPO) market, with retailers including Poundland, Pets at Home and AO World in recent weeks making their debut on the London Stock Exchange (LSE).

With the latest figures from Thomson Reuters showing that the value of LSE listings is up by 677% compared to this time last year, Pets at Home listed in mid-March at a value of £1.2bn, gifting Simpson Thacher & Bartlett, Clifford Chance (CC) and Travers Smith with lead mandates.

Simpson Thacher heavyweight and former CC partner Adam Signy led for private equity owners Kohlberg Kravis Roberts on the listing, while CC secured a role for the banks, which included Goldman Sachs and Bank of America Merrill Lynch.

Travers advised the issuer, with tax partner Russell Warren and corporate partner Adrian West leading for longstanding client Pets at Home.

Also announcing its intention to float was Danish start-up Just Eat, valued at the time of going to press at between £700m and £900m, and on which Herbert Smith Freehills (HSF) and Linklaters are taking the lead.

HSF corporate partner Chris Haynes and US-qualified global head of capital markets Steve Thierbach are advising the online takeaway food delivery service.

Linklaters is acting for chief underwriters Goldman Sachs and J.P. Morgan Securities, with corporate partner Iain Wagstaff advising on English law, while City-based Mike Bienenfeld is providing US law advice.

Haynes and Thierbach both also recently advised on the £1.6bn float of AO World, alongside corporate partner Mike Flockhart.

At Slaughter and May, which last year secured a run of high-profile flotations including esure, Royal Mail and Infinis, corporate partner John Papanichola, who led for Royal Mail, said the market is far more self-assured now. ‘There’s much more confidence – that’s the main thing which is allowing companies to step forward. What’s interesting is if you wound back a few years, an event like what’s going on in Ukraine would have closed the IPO market. That doesn’t seem to be holding companies back.’

‘The Magic Circle get a good share but given the volume of deals there’s definitely other players active.’
John Connolly, Clifford Chance

The result has been a significant uptick in work for capital markets partners and Papanichola added: ‘It’s very intense. It’s probably the most intense work we do just because the period taken for doing an IPO is between two to six months – there’s not much let up. An M&A deal has its ebb and flow whereas IPOs just fill up every minute.’

The increase in volume also means that work is likely to fan out across the City’s capital markets teams more readily. CC capital markets partner John Connolly, who advised the underwriters in the £553m IPO of UK homebuilder Crest Nicholson Holdings and Abu Dhabi hospital operator Al Noor Hospital last year, told Legal Business: ‘The Magic Circle have established track records and get a good share but given the volume of deals there’s definitely other players active.

‘Whenever the market is good and strong like this you see a broader universe of law firms participating.’