UK Capital Markets Insights Q3 2020 Copy

REVIEW OF AIM AND MAIN MARKETS 2020

UK CAPITAL MARKETS INSIGHTS

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The BDO UK Capital Market Insights report analyses the activity of the AIM and Main Markets of the London Stock Exchange on a quarterly basis. Transaction activity includes IPOs, fundraises, sector trends and significant deals. Every quarter our report also takes a look at a sector in focus. In this edition, rather than review Q4 - 20 in isolation, we comment on 2020, a year which at first challenged the markets, following the first COVID - 19 lockdown, and closed with buoyant activity.

The AIM All-Share continued to increase in Q4 - 20, outstripping pre - pandemic levels. The FTSE All - Share was held back by wider global economic factors, including a rise in Sterling particularly against the dollar in the final quarter of the year. 2020 was the largest year for public fundraising in over a decade. The early part of 2020 was dominated by emergency fundraisings. However, Q4 - 20 saw more growth driven placings on the back of improved investor confidence and higher share prices. Q4 - 20 saw £4.1bn of IPOs, bringing new issue proceeds to £10.4bn across both AIM and the Main Market in 2020, the highest level since 2015. Further issues were driven by a diverse range of sectors across both markets. The large volume of total fundraises made 2020 the largest year for public markets in over 10 years. COVID - 19 saw many listed real estate funds unable to raise funds and execute investment strategies on the back of shares trading at heavy discounts to NAV. Fundraising and M&A activity increased towards the end of 2020 and into the new year, as share prices recovered, but investors remain selective.

2020

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£16bn

£12bn

£14bn

£10bn

£8bn

£6bn

£4bn

£2bn

Q1-18

Q2-18

Q3-18

Q4-18

Q1-19

Q2-19

Q3-19

Q4-19

Q1-20

Q2-20

Total transaction volume

Retail

Technology & Media

Financial services (general)

Healthcare & pharma

Leisure & hospitality

Financial services (funds)

Real estate & REITs

Natural resources

Other

118

233

173

211

162

217

155

181

168

245

SECTOR ACTIVITY

NEW VS FURTHER ISSUE

01 Main mARKEt INSIGHTS

£3.9bn was raised in IPOs in Q4 - 20; the largest transactions were in financial services, including the IPO of Conduit Holdings Limited Main Market share prices remained 10% below its pre COVID - 19 level at 31 December 2020; primarily due to the weighting of banking and natural resources stocks in the FTSE. £10.2bn was raised in further issues, primarily in three major transactions in Q4 - 20. Fundraising continued to be driven by a diverse range of sectors in Q4 - 20. Consumer - focused brands remained the driver of fundraising (primarily due to the high levels of emergency fundraising in H1) but other industries took advantage of fundraising opportunities to drive growth.

UK CAPITAL MARKET INSIGHTS: OVERVIEW

The performance of the AIM and Main Market indices Key drivers of transactional activity, including new and further issues by sector across the exchanges Noteworthy fundraises and market dynamics The most active advisors Recent technical updates and guidance

ABOUT UK CAPITAL MARKETS INSIGHTS

This publication has been carefully prepared, but it has been written in general terms and should be seen as containing broad statements only. This publication should not be used or relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained in this publication without obtaining specific professional advice. Please contact BDO LLP to discuss these matters in the context of your particular circumstances. BDO LLP, its partners, employees and agents do not accept or assume any responsibility or duty of care in respect of any use of or reliance on this publication, and will deny any liability for any loss arising from any action taken or not taken or decision made by anyone in reliance on this publication or any part of it. Any use of this publication or reliance on it for any purpose or in any context is therefore at your own risk, without any right of recourse against BDO LLP or any of its partners, employees or agents. BDO LLP, a UK limited liability partnership registered in England and Wales under number OC305127, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. A list of members' names is open to inspection at our registered office, 55 Baker Street, London W1U 7EU. BDO LLP is authorised and regulated by the Financial Conduct Authority to conduct investment business. BDO is the brand name of the BDO network and for each of the BDO member firms. BDO Northern Ireland, a partnership formed in and under the laws of Northern Ireland, is licensed to operate within the international BDO network of independent member firms. Copyright © February 2021 BDO LLP. All rights reserved. Published in the UK.

Our quarterly UK Capital Markets Insights publication tracks the performance of the AIM and FTSE markets of the London Stock Exchange. Produced by our capital market team it examines market data to identify key trends and includes our outlook for the coming months, covering:

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183

Q3-20

UK Capital Markets Insights 2020 H1

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To find out more about our services or to meet the team, visit our Capital Markets service page

+44 (0)20 7893 2058 chris.searle@bdo.co.uk

CHRIS SEARLE Corporate Finance Partner Transaction Services

+44 (0)20 7893 2678 ian.cooper@bdo.co.uk

IAN COOPER Corporate Finance Partner Transaction Services

UK Capital Market Insights 2020 Q4

UK Capital Markets Insights 2020 Q1

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2020 proved to be a good year for the capital markets overall as it demonstrated that listed companies could raise emergency funds relatively quickly and efficiently compared to their private counterparts. As a result, we are currently seeing an increase in IPO mandates and enquiries across both AIM and the Main Market. Whereas fundraisings in Q2 - 20 principally aimed to shore up balance sheets, we saw more companies raising growth capital in the second half of the year as they sought to take advantages of opportunities presented by the pandemic, a trend that we see continuing well into 2021.

MOST

PUBLIC

FUNDRAISING

IN 10

YEARS

LEVELS

PRE COVID-19

HIGHER THAN

20%

AIM ended

THE YEAR

ended the year

THE FTSE

ALL SHARE

PRE COVID-19 LEVELS

10% BELOW

£10.4bn

New issue proceeds for

AIM and Main Market

at highest level for 5 years

COVID-19

FUND RAISES in 2020

HELD BACK REAL ESTATE

Q4-20

222

216

156

187

151

199

142

172

156

237

174

194

Further issue transaction numbers

New issues transaction number

Further issue total raise

New issue total raise

Q1-18

Q2-18

Q3-18

Q4-18

Q1-19

Q2-19

Q3-19

Q4-19

Q1-20

Q2-20

Q3-20

Q4-20

Further issue transaction numbers

New issues transaction number

Further issue total raise

New issue total raise

SECTOR ACTIVITY

NEW VS FURTHER ISSUE

02 AIM INSIGHTS

In contrast to the FTSE, which declined over 2020, the AIM All - Share index continued its recovery and ended the year 20% higher than the start of 2020. As a result year end average market capitalisation per company on AIM was the highest on record at 31 December 2020. There were 16 IPOs on AIM in Q4 - 20 raising £260m, primarily in the online consumer, technology and healthcare & pharma sectors. Further issue proceeds in Q4 - 20 amounted to £1.6bn. More than the Main Market, AIM saw a high proportion of companies with opportunities for growth through the pandemic come to market in Q4 - 20. Healthcare & pharma made up the largest proportion of fundraising on AIM in Q4 - 20, raising £452m in Q4 - 20 and £1.4bn over 2020.

£1.0bn

£1.5bn

£2.0bn

£2.5bn

£0.5bn

Total transaction number

Real Estate & REITs

Leisure & hospitality

Other

Natural Resources

Healthcare and Pharma

Financial services (general)

Technology & Media

Retail

462

487

374

405

370

415

355

415

355

442

522

592

450

464

361

389

365

405

351

412

348

439

516

576

LOOKING BACK AT 2020

Main Market insights 2020 Q3

2020: KEY FACTS AND FIGURES