Investors are set to snap up cheaper IPOs after a series of flops at the start of the summer, Unicorn managers Fraser Mackersie and Simon Moon have forecast.
The managers, who have bought into 12 IPOs since the middle of last year, said the plunging share price of newly-floated firms such as suit maker Bagir has helped “push the reset button”.
Mackersie said: “There were some high-profile flops over the summer. That always makes people nervous. For us it probably had a positive impact on valuations and what companies expect to achieve.
“You do not get a huge amount of looking to the future with IPOs, but we think the last quarter of this year will be pretty active.”
The managers plan to take a close look at the challenger bank Aldermore, which is planning a £75m flotation. They already own Secure Trust Bank, which listed on AIM in 2011.
The Unicorn UK Income fund returned 80.8% over the three years to 22 September 2014, compared to a sector average of 56.1%, according to FE. The fund has underperformed the average over the past year.
Mackersie and Moon have faced a difficult year, with the sell-off in small and mid-caps followed by the death of Unicorn founder and co-manager John McClure (pictured).
In the week after McClure passed away, the fund saw 4.5% of its assets exit in redemptions. However, Mackersie said the managers were expecting worse: “Simon and I got in front of a lot of investors. We spoke to roughly 450 people and we have been encouraged by the response. The redemptions were not what they could have been.”
McClure’s investment process will be followed for the foreseeable future, they added.
