Ship shape and ready to float? IPO market picks up but headwinds remain for small launches

Larger vehicles in better stead

The investment company IPO market is expected to resume its recovery through 2021, as the need for income-generating solutions continues unabated, but headwinds to gaining critical mass in parts of the market will weigh on investment managers as wealth managers cast a critical eye on prospective issues in crowded sectors.

The 21 months to end-September had been quiet for new issuance from investment companies, with 2019 the lowest annual total (£1.4bn) raised through IPOs since 2016, and just one firm coming to market in the first nine months of last year. However, the market burst back into life in Q4 2020, with £921m raised by seven companies on the back of rising markets buoyed by positive news on Covid vaccines. It was the best three-month period for investment company primary fundraising since Q4 2018, when eight trusts raised £1.4bn. That said, 2020 was equally notable for the number of trusts...