An Initial Public Offering (IPO) is when a company lists its shares on a stock exchange for the first time. The money raised during an IPO is typically used to grow the company or allow existing shareholders to realise some of their investment.
IPOs can offer exciting opportunities for investors. It’s often the first chance people will get to invest in a major, global brand.
Until a company formally announces its intention to float on the stock market, IPOs are shrouded in rumours. Once confirmed, an IPO can happen very quickly, with investors only having a week or two to apply.
Below we look at five companies rumoured to be considering an IPO soon. If you’re interested in these and how you could participate, register for our free IPO alerts and we’ll keep you informed with companies coming to the market.
Please remember that the value of investments, including companies listing through an IPO, can fall as well as rise in value so you could get back less than you invest.
O2 – estimated £10bn value
O2 has a long track record of ownership by private investors following its demerger from BT in 2001.
With more than 25m customers nationwide, O2 is one of the UK’s largest mobile operators, and also owns half of Tesco mobile.
Rumours of O2’s IPO have been swirling for some time. Telefonica tried to sell O2 to rival Three for £10.3bn in 2016, but the deal was blocked by EU regulators.
Compare the Market (BGL Group) – estimated £2bn value
Comparison website CompareTheMarket.com is probably BGL’s most high profile business. It was launched in 2006, with its signature meerkats first appearing on TV screens in 2009. The group also operates a similar website in France under the “les furets” (the ferrets) brand, runs a life insurance business and offers support services for other insurers.
While no fixed timescale has been set for the company’s IPO, Matthew Donaldson, chief executive of BGL Group, has said he plans to be ready for a listing by the second half of 2017.
Aston Martin – estimated £2.5bn value
Rumours of Aston Martin’s IPO plans have been circling since 2011 when former CEO, Ulrich Bez, said a listing would be a natural exit for its investors. Press reports now suggest Aston Martin could list on the stock market as early as the start of 2018.
Investindustrial, who own a 37.5% stake in Aston Martin, quelled rumours stating they are not working on an IPO and that any future decision regarding an IPO will be a matter for shareholders and Aston Martin’s board.
Jaguar Land Rover
Another luxury car brand, more conflicting IPO reports.
Jaguar Land Rover Automotive plc (JLR) is the UK’s largest vehicle manufacturer, selling more than one car every minute. The company was bought by Tata Group in 2008 for $2.4bn and, having seen annual Jaguar sales increase almost 130%, are now said to be considering a listing in either London or New York.
In its latest annual results released in May, JLR reported record sales of 604,000 vehicles and full-year revenues of £24.3bn, up 9%, generating pre-tax profits of £1.6bn, up 3%.
However, a spokesman for Tata Group has stated there were no plans to list JLR.
Saudi Aramco – est. $2tn value
Potentially the biggest initial public offering (IPO) in history by value. Saudi Aramco, the national oil company of Saudi Arabia and the world’s biggest oil producer, plans to sell 5% of the company in a deal expected to raise $100bn. This would value the company at $2tn.
The IPO was expected in early 2018, but is now likely to take place later in the year or in early 2019. However, Saudi Aramco has yet to announce whether it will list on the London Stock Exchange or in New York (in addition to the Saudi Stock Exchange), although listing rules may force its hand.
US regulations would likely require the company to divulge information about Saudi Arabia’s oil reserves, something the Saudis consider a national security secret. Meanwhile the FCA has announced a proposal to “create a new category within its premium listing regime to cater for companies controlled by a shareholder that is a sovereign country” which could allow Aramco to comply with UK listing rules.
IPO alert service
You could be the first to hear about any IPOs available through Hargreaves Lansdown. IPOs happen very quickly, without much warning and some private investors miss the opportunity to find out more and participate. Register now for our free IPO email alerts direct to your inbox to make sure you are kept informed of companies coming to the market.
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Any publication of an IPO on our website is not an endorsement of the issue. Your decision to invest in an IPO should be made solely on the basis of the Prospectus, and supplementary information. The specific risks will be detailed in the Prospectus but the value of all investments can fall as well as rise, so you may get back less than you invested.
Companies subject to an IPO may not have a long track record and could be difficult to value or calculate a fair price for. IPOs and bond launches are therefore only likely to be a consideration for more diverse, larger portfolios. In many IPOs you will not know the purchase price before you commit to buy and therefore might end up buying at a higher price than you wished. If you have any doubts about the suitability of an IPO for your circumstances you should seek expert advice.
Nicholas Hyett Equity Analyst
www.hl.co.uk/news/articles/five-exciting-ipo-rumours
