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‘Rushed’ IPOs resulting in poor quality listings

HIGH LEVELS OF DEMAND for London Stock Exchange floats is leading to “rushed” listings with poor-quality documentation, a leading institutional investor has warned.

BlackRock’s James Macpherson, who heads UK equity at the $4trn (£2.4trn) asset manager, said the volume of companies looking to list is resulting in hasty due diligence and a drop in standards, City AM reported.

Macpherson told the LPEQ conference: “With the rush is coming the diminution of quality. The process is becoming rushed, the quality of documentation is slipping and as investors we have to be increasingly on our guard.”

Rothchild’s Adam Young added that some initial public offerings (IPOs) currently in the early stages of marketing could end up as M&A trades at a lower value, as a result of shareholders being more cautious after having being burned by shaky listings that dropped from their initial value.

Recent months have seen floats from specialist insurance and holiday-provider Saga, easyJet spin-off easyHotel, property website Zoopla, financial services firm River & Mercantile and budget airline Wizz Air. Newly-listed firms Pets at Home, Poundland and Just East were set to enter the FTSE 250, while annuity provider Partnership Insurance was headed for the Small-Cap index.

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