2021 could be ‘biggest for UK software IPOs’ in years, says analyst

The UK software space could be in for an exciting year for companies joining public markets, claim analysts.

‘We think 2021 could be one the biggest years for UK software IPOs for a very long time’, said Rob Warensjo, one of the analysts on the Megabuyte research team.

‘Not only by number but also by size’, said Warensjo, with the likes of Paysafe, TransferWise, Darktrace and Deliveroo all gearing up for IPOs that will value them in the ‘billions of pounds.’

Darktrace is a cyber security specialist that uses machine learning to understand the ‘pattern of life’ for users and devices so it can spot unusual behaviour.

Paysafe provides secure digital payment services to businesses and organisations around the world.

TransferWise allows people and enterprises to move money around the globe quickly, easily and safely in more than 50 currencies.

An IPO, or initial public offering, is the process where companies sell shares to investors and then list the stock on a stock market, such as the London Stock Exchange (LSE), where they can be easily bought and sold. IPOs are usually institution-only affairs to make the process easier and less expensive, although some do open subscriptions for stock to ordinary investors.

Royal Mail (RMG) was one of the most recent examples back in 2013, when it sold stock in the business to members of the public at 330p per share alongside funds and other institutions. But this is rare and unlikely to be the case with the exciting line-up of potential UK tech IPOs this year.

TECH’S FINANCIAL REFUELLING

Megabuyte’s Warensjo believes this is part of a larger trend that has seen UK tech businesses raise growth funding to bolster their expansion financial firepower recently. For example, compliance software company Ideagen (IDEA:AIM), one of Shares Great Idea investment plays, raised £50 million from investors in December to fuel a fresh acquisition-led expansion push.

However, as Shares recently wrote about Deliveroo’s plans, UK tech businesses may not choose the London stock market to IPO. They could instead be lured away to US markets in an attempt to grab the fullest possible valuation.

Watch this space.

Issue Date: 29 Jan 2021