- Two of the biggest potential UK stock market listings this year plan to include retail investors in their IPO offers: Shawbrook and Princes Group
- Last year saw a 9.2% average day one ‘pop’ for IPOs – the difference between their IPO price and the open price on their first day of dealings
- Similar trends have been recorded this year and in 2023
- 12 out of 16 UK IPOs traded higher on their market debuts last year
- Biggest day one ‘pop’ this year so far of 37.5% came from digital health platform Medpal AI
Dan Coatsworth, head of markets at AJ Bell, comments:
“Two of the biggest flotations on the London market this year will allow retail investors to participate in their IPO offers. Shawbrook and Princes Group are keen to get the public involved, rather than the old model of restricting IPOs to institutional investors.
“This is significant for two reasons. First, it shows IPOs are no longer the domain of the elite; and second, history shows that some of the biggest initial gains sometimes come at the market open on the first day of dealing.
“Investors who buy at the IPO offer price stand to benefit from a potential day one ‘pop’ in the share price. Those who wait for the shares to start trading might find they miss the pop and must pay more than the IPO price.
“It’s also worth noting that stamp duty is not applicable when you buy shares under an IPO. Stamp duty on shares is a hot topic as the tax currently makes the UK stock market less competitive compared to many other countries which don’t charge it. There is talk that the UK government might grant a stamp duty holiday for the first two to three years of a company’s life on the UK stock market in a bid to provide a boost London’s IPO market and encourage more new listings.
“In 2023, new listings on average started trading 10.5% above their IPO price, according to analysis by AJ Bell. That means someone who took part in the IPO could have made a decent return in a flash. In 2024, the average ‘pop’ from the IPO price to the first day opening price was 9.2%. The average is 7.2% so far in 2025, based on AJ Bell figures.
“IPOs are often priced 10% to 20% below their intrinsic value to help attract investors. The IPO pop that often happens when a company lists their shares is effectively the reward for taking the risk of backing an entity that has yet to deal with the trials and tribulations of being on the stock market.
“Being listed might raise a company’s profile, but it can also put pressure on management as their every move is watched by investors.
Biggest day one ‘pop’ so far in 2025
“The strongest day one pop so far this year happened in August when Medpal AI’s shares opened 37.5% above its IPO price.
“Medpal is a digital health platform and ran a retail offer to raise up to £360,600 as part of its IPO. This offer was oversubscribed, creating pent-up demand from investors who failed to get what they wanted or missed out on the IPO offer altogether.
“Medpal’s IPO was priced at 4p, it then started trading at 5.5p on 26 August and hit an intraday high of 13.5p on 4 September. That means someone who bought into the IPO offer and sold at the peak could have made more than three times their money in just over a week. It is worth noting that most IPOs on the UK market do not typically motor so fast in such a short space of time.
“AJ Bell customers were able to take part in Medpal’s IPO and three other IPO offers earlier this year on AIM or London’s Main Market: The Beauty Tech Group, Quantum Base and MHA. All of them traded higher on their market debut. Overall, 10 out of 13 new listings in the UK this year have delivered an IPO pop on day one. Two were flat while one slipped 2.4%.
High percentage of UK IPOs ‘pop’
“In 2024, 12 out of 16 IPOs traded higher as soon as markets opened on their first day of dealing. Half of these stocks achieved double-digit pops, the highest being computer group Raspberry Pi whose shares started trading 28.6% above their IPO price. Notably, Raspberry Pi was among the select few stocks to include retail investors in its IPO offer.
“These statistics might give the impression that trading IPOs is easy money. But it is important to remember that investing isn’t a guaranteed ticket to wealth creation, and some can equally destroy wealth very quickly. As with any decision to invest, investors should consider whether a new listing fits with their overall investing strategy and goals before thinking about piling in.
“Certain IPOs have fallen flat on their face, as Deliveroo backers found out the hard way. Deliveroo priced its IPO at 390p, but the stock opened 15.1% lower at 331p on the first day of dealings and then fell further.”
