Insights

Green shoots of recovery after COVID-19

The UK primary markets had a positive start to 2021, with investors placing a keen focus on the vaccination rates, as well as the UK government’s road map to ‘normality’.

Strong retail spending, as well as the schools reopening, allowed economic growth of 3.6% in the first half of 2021.

Unsurprisingly, UK markets in H1 2021 saw a dramatic improvement on its comparative period last year. In fact, the quarter to March 2021 was the most lucrative out of the equivalent quarters of the last five years. Capital raising via IPOs broke a long-held record, with 49 IPOs completed in the first six months of 2021. London continued to be Europe’s most active exchange, raising over £27bn in equity capital in the first half of 2021.

In spite of this, the economy is still 8.7% smaller than it was compared to pre-pandemic levels. However, investors remain optimistic about the future in having confidence in the longevity of eased COVID-related social restrictions and hoping to see both a continuation in the country’s economic recovery and increased market activity.

Although we’ve still seen a number of successful transactions over the past year, we’re now starting to see a far broader range of activity in a wider range of sectors, with companies looking to grasp opportunities quickly as the economy reopens.

Medicinal cannabis takes off in the UK

There’s been a strong pipeline of Initial Public Offerings (IPOs) in the second quarter of 2021, with a total of 35 across both markets. AIM IPOs included: four in the investment sector, three in software and computer services, two in retail and three in cannabis (excluding reverse takeovers). Main Market IPOs included: MGC Pharmaceuticals Limited, Cellular Goods Plc and Kanabo Group Plc in H1 2021. MGC, leading the way for medicinal cannabis companies on the London Stock Exchange (LSE), raised £6.5m before expenses. They were shortly followed by Kanabo Group’s reverse takeover in the cannabis space, raising £6m before expenses.
 
We were delighted to act as the reporting accountant for all three aforementioned cannabis transactions, which brought the total number of cannabis companies on the LSE and AIM to six.

While the North American market is still advanced compared to the UK, cannabis listings have really taken off in the first quarter of 2021.

The market’s still relatively new in the UK, following the change in UK law permitting the use of medicinal cannabis in 2018 and the FCA’s subsequent announcement to allow medicinal cannabis companies to list on the LSE from September 2020.

We expect to see this trend continue and many more to come to the market over the course of this year.