Robert Jackman

Is it worth investing in IPOs?

Image: Getty

Will 2021 be London’s year of the IPO? After a quiet few years for the FTSE – a sharp contrast with the NASDAQ’s seemingly unstoppable IPO mania – it looks like things might finally be on the turn, as the City looks forward to its biggest list of debutantes in years.

Indeed the much anticipated IPO rush – which is set to include lockdown champions Deliveroo, beer chain Brewdog, and cyber-security unicorn Darktrace – has already begun. At the end of January, the FTSE welcomed two new entrants whose names will be familiar to most investors: customised card producer Moonpig and the ever-iconic Dr Martens (the latter touted as a hot pick by The Spectator’s Sam Leith).

As is usually the case these days, both IPOs caused a flurry of excitement. By the time both had officially joined the exchange – making their stocks available to DIY investors for the first time – their shares had risen 20 per cent beyond the official IPO price. It’s a reflection of the degree of pent-up demand from a market that’s been starved of fresh meat in recent years.

For the individual investor, no IPO is a sure thing. And whether Dr Martens will follow the path of recent entrants WizzAir (up 360 per cent since its 2016 debut) or Aston Martin (down 80 per cent in 28 months) remains to be seen. But a healthy spread of expected IPOs does say something about the health of a stock-market in general – and the economy of its host country.

If multi-billion pound companies are joining the FTSE, it means they’re confident that our capital markets can provide the money they need to grow. They’re also making a vote of confidence in the UK economy more broadly. And coming so soon after Brexit, that’s no small thing.

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