This report is not a personal recommendation and does not take into account your personal circumstances or appetite for risk.
25 September 2015
Excitement is once again in the air as a fresh pair of UK companies – payments processing giant Worldpay and leading car insurer Hastings Direct – confirm their ‘intentions to float’ in London next month. This doesn’t imply either face a risk of drowning. On the contrary. Things are going so well that they both would like to offer you the investor a chance to share in the spoils of a strongly growing business. To ‘float’ is to sell a stake in a private company, that stake and those shares becoming publicly tradeable on an equity market such as the London Stock exchange. If the company is large enough as should be the case with Worldpay (£6bn – biggest in 4 years), the shares can even feature in a major index like the UK’s UK 100 of blue-chip household names (at £1.5bn, Hastings Direct should be ).
The whole process is known as an Initial Public Offering (IPO) and while the number of companies looking to ‘float’ has fallen from the giddy heights of 2014, when everyone jumped on the IPO bandwagon, the size and quality of the those looking to do so remains high. Fellow insurer and RBS spin-off Direct Line Group (DLG) was the only major listing of 2012 and its shares have since doubled. But it was Royal Mail (RMG) this time two years ago which really got the public interested in investing/trading new shares. Such was the demand for Royal Mail’s IPO (15 times oversubscribed!) that its shares began trading 36% above the official IPO price and showed gains of over 75% within just a few weeks – a more than attractive quick return I’m sure you’ll agree.
Since then, with names like AO World (AO), Poundland (PLND), TSB Banking (acquired) and Autotrader (AUTO) delivering day-1 IPO gains of 10-40%, the hope and expectation is that demand for both Worldpay and Hastings Direct shares will be strong. 2015 has seen nine decent London IPOs since Feb (average size £1bn) and all but 1 are trading above the IPO price (average 25% gains). Given the implication of DLG’s track record for Hastings Direct and the uniqueness of Worldpay’s business model in an increasingly ‘consumer’ and ‘mobile’ world, we expect interest in both to be very high. Check your email inbox Sunday evening for our dedicated Worldpay/Hasting Direct IPO report. This will discuss the two companies involved and the trading opportunities available to you before, during and after their IPOs next month. Make sure you receive our award-winning trading research daily to be kept alert of the latest IPO developments.
Don’t miss the boat on the next biggest float.
Mike van Dulken, Head of Research
This research is produced by Accendo Markets Limited. Research produced and disseminated by Accendo Markets is classified as non-independent research, and is therefore a marketing communication. This investment research has not been prepared in accordance with legal requirements designed to promote its independence and it is not subject to the prohibition on dealing ahead of the dissemination of investment research. This research does not constitute a personal recommendation or offer to enter into a transaction or an investment, and is produced and distributed for information purposes only.
Accendo Markets considers opinions and information contained within the research to be valid when published, and gives no warranty as to the investments referred to in this material. The income from the investments referred to may go down as well as up, and investors may realise losses on investments. The past performance of a particular investment is not necessarily a guide to its future performance. Prepared by Michael van Dulken, Head of Research
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