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Shares in UK financial technology company CAB Payments fell sharply in their first day of trading in London, underscoring the challenges the City faces to recover from a dearth of initial public offerings.
CAB Payments fell 9.6 per cent after raising around £300mn in one of the few UK listings this year. The deal, which had a market capitalisation of £851mn at IPO, was the largest public debut in London this year excluding blank-cheque vehicles.
The group, which specialises in foreign exchange and payment services for businesses sending money to emerging markets, offered its shares at £3.35. At market close, the stock price was about £3.03 per share.
A combination of limited liquidity and post-Brexit uncertainty have been blamed for the lack of listings. In June, soda ash producer WE Soda blamed “extreme investor caution in London” when it cancelled its planned $7.5bn listing, which would have been the UK’s biggest this year.
Earlier this week, UK broker Numis warned of the “effective closure” of the London IPO market.
The announcement of CAB Payment’s IPO in June was a rare bright spot for the UK stock market, which has struggled to attract IPOs this year.
“Deciding to list signifies . . . the confidence that we have in the UK as the home for innovative and growing global fintech businesses,” said chief executive Bhairav Trivedi.
CAB’s offering consisted entirely of a secondary selldown of existing shares held by Africa-focused private equity group Helios Investment Partners and other investors.
The European IPO market meanwhile has begun to show some signs of activity after a sluggish start to the year.
Romania had its largest ever IPO this week, for power company Hidroelectrica, which raised about $2bn. It was the biggest European market debut since Porsche listed last year.
“The market is warming up but still it’s going to be selective,” said one banker who worked on a recent European IPO.
UK-listed fintech stocks in particular have struggled amid rising inflation and worsening consumer sentiment. Shares in Wise, another UK business with a focus on cross-border payments, have fallen almost 35 per cent since the IPO in July 2021.
Investors have also cut the valuation of private fintech groups. In June, venture capital group Molten Ventures reduced the valuation of its stake in Revolut, one of the highest valued fintechs in the UK, by 40 per cent.