Themen:
Insights
7 February 2025
By Jonny Abbott, Director, Equity Capital Markets, Deutsche Numis.
The coming year is expected to be a more buoyant one for ECM transactions, according to Deutsche Numis’ latest Mood of the Market report, with institutional investors poised for a rise in activity and a positive year for the UK market.
Our report combines insights from our annual investor survey of over 200 institutions that invest in UK equities with learnings from the extensive start-of-year conversations our sales team have with our buyside clients.
We found that an overwhelming majority (84%) of institutional investors expected secondary offerings in the UK market to rise in 2025. This optimistic outlook coincided with tentative signs of a market turnaround in the last quarter of 2024, as fund flows into UK equities turned briefly positive in November.
That uptick in fund flows will partly have been a post-Budget effect, but the case for a recovery in secondary offerings is solid. As we note in Mood of the Market, Deutsche Bank strategists have a clear preference for European equities over US equities due to their more attractive valuation multiples. And within Europe, they regard the UK as offering the best risk/reward profile.
Corporates and institutional investors limbering up for deal activity
Corporate balance sheets in the UK remain strong, and we see signs that UK management teams are actively considering investment both in organic and acquisition-driven expansion.
And on the institutional side,76% of investors surveyed said they have a more positive outlook for the UK market going into 2025 than the previous year.
Also 71% of institutions are currently holding higher proportion of cash in their funds than at the same time last year, providing a helpful backdrop of liquidity to support fund raising activity.
Turning the corner in 2025
A rise in ECM activity would mark a welcome turnaround from the muted levels seen in the second half of 2024, when the value of equity capital market deals were lower than the same period in 2023. Deal volumes, however, were slightly up, with 187 deals in the second half of 2024 compared to 173 in H2 2023.
Deutsche Numis ranked second among advisers for deal value in the second half of 2024, acting on some of the largest transactions to take place during the period, including Pfizer’s £3.25 billion sell-down in Haleon in October and the largest UK IPO of the period, Applied Nutrition.
With the significant rise in positivity among institutional investors revealed in our Mood of the Market report, which aligns with our own views on the outlook, it seems 2025 could be the year UK equity capital markets bounce back.