London’s first major IPO this year abandoned due to ‘extreme investor caution’

We Soda’s decision to cancel its listing deals a huge blow to London’s struggling stock market.

Britain’s first major flotation this year has been abandoned (Dominic Lipinski/PA) (PA Archive)

London’s languishing stock market has been dealt a massive blow after Britain’s first major flotation this year was abandoned due to “extreme investor caution” in the UK.

We Soda, the world’s largest producer of natural soda ash, used to make glass, soap, and paper, pulled out of the initial public offering (IPO) just one week after it was announced.

The decision to list on the London Stock Exchange had been hailed as a much-needed boost after a sharp drop in the number of flotations.

But We Soda said on Wednesday it has been forced to cancel the IPO after failing to drum up enough funding and reach a valuation it was happy with.

The reality is that investors, particularly in the UK, remain extremely cautious about the IPO market

Alasdair Warren, chief executive of We Soda

Chief executive Alasdair Warren said: “Since our intention-to-float announcement some weeks ago, we had been encouraged by the breadth of investor engagement globally and the subsequent interest from prospective investors in our IPO.

“Despite this, the reality is that investors, particularly in the UK, remain extremely cautious about the IPO market and this extreme investor caution in London meant that we were unable to arrive at a valuation that we believe reflects our unique financial and operating characteristics.”

The IPO was expected to raise up to 800 million US dollars (£645 million) for the Turkish-owned company, and secure it a place on the FTSE 100 in the future.

It comes as London markets have gone through a prolonged quiet spell when it comes to new listings.

The proceeds from a handful of IPOs at the start of this year were 99% lower than the record levels seen in the first quarter of 2021, according to stark figures from EY.

This is a fresh blow for London just as confidence in the city as an IPO launchpad appeared to be edging back upwards

Susannah Streeter, Hargreaves Lansdown

Morale was worsened after Cambridge-based chipmaker Arm decided earlier this year to pursue a US-only stock market listing, despite lobbying from the Prime Minister for it to stay on UK shores.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said companies may be setting sights on New York over London amid economic and financial market volatility in the UK.

“This is a fresh blow for London just as confidence in the city as an IPO launchpad appeared to be edging back upwards.

“Investors are understandably cautious given the nervousness surrounding the UK’s prospects with inflation still running so hot.”

Markets will be hoping the move does not shake the confidence of London-based payments firm CAB Payments, which said last week it was considering listing on the London Stock Exchange.

It is thought to be valued at between £800 million and £1 billion, which would make it the first major IPO in London this year if it goes ahead.