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5 December 2024
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Six weeks on from Applied Nutrition’s IPO on the London Stock Exchange, one of the most prominent IPOs of the year, we spoke to Jamie Loughborough, Co-Head of ECM at Deutsche Numis, and Jonny Abbott, Director, ECM, to find out about some of the key takeaways from the deal and what it may signal for the UK markets as we look towards 2025.
How have investors responded to the Applied Nutrition IPO?
Jamie: We were very pleased to see such a high level of investor interest in this IPO, both from the institutional and the retail investor communities. This confirmed the anecdotal feedback we have been hearing from investors for some time now that they are keen to support new companies coming to market.
Jonny: We were delighted to secure the backing of five of the highest quality growth investors in the UK, with abrdn, JP Morgan Asset Management, Slater Investments, Polar Capital and Baillie Gifford all becoming >3% shareholders at the point of IPO. The transaction was also cornerstoned by four prominent North West entrepreneurs, who were all keen to support another founder from the region – it is relatively unusual to have high-net-worth individuals as named cornerstones in an IPO but we used this to very good effect here.
What could it mean for the UK market going into 2025?
Jamie: The deal represents the largest UK consumer IPO since 2021 and one of the only prominent Main Market UK IPOs in H2 to date. We hope and very much believe that the successful result we have achieved for Applied Nutrition will encourage other founders and business owners to see an IPO as an attractive liquidity and funding option as we move into 2025.
Jonny: Indeed, following the completion of the Applied Nutrition IPO, we have already had a number of interesting conversations around other potential IPOs with founders, management teams and sponsors. We feel very positive about the prospects for a meaningful uptick in UK IPO activity in 2025.
In this market, what are investors looking for when considering whether to back a company at IPO – and what can companies do to position themselves optimally?
Jonny: As ever, fund managers are looking for companies that display differentiating characteristics or compare favourably to those already listed on the stock market, as ultimately it is a fund allocation decision.
Jamie: Laying the groundwork early has always been, and remains, key to preparing effectively for a successful IPO. One thing a company can consider is an IPO readiness assessment, in order to stress-test the business for areas that might need reinforcing before embarking on the journey.
The importance of laying those initial foundations also extends to investor engagement, and meeting investors early in the process is really useful as you look to start building your fan club. This early feedback can be hugely valuable as you think about positioning the business for IPO, and it also allows you to update those investors later on in the process on what you’ve achieved since you first met them, helping them to gain confidence in your ability to successfully deliver against your plans.
What do advisers need to provide in this market to deliver success for their clients?
Jonny: In a quieter market it really is important to leave no stone unturned when it comes to investor engagement, and on Applied Nutrition we carried out extensive investor marketing earlier this year as well as holding a number of site visits at the company’s headquarters in Knowsley during the less busy summer months.
As is always the case, positioning the business correctly from the outset is crucial but also anticipating the likely areas of challenge from investors and ensuring the management team is well prepared to answer the important questions succinctly.
Do you expect to see any trends in London listings vs international markets in 2025?
Jamie: There has been much made in the press around potential issuers choosing international markets over London, but on the ground we believe the London market remains a very attractive listing venue for companies, both domestic and global.
The US is Applied Nutrition’s biggest growth market, but Thomas Ryder, the founder, was very clear that if he was ever going to list his company then as a British business it was only ever going to be on the London Stock Exchange, and we know this is a view shared by many other UK founders/entrepreneurs.
Meanwhile, the news that Shein is considering listing in London is a reminder that London is still very much part of the debate for large international businesses when considering the appropriate listing venue.