This year has been like no other. Covid-19 has disrupted businesses, events and the initial public offering (IPO) market.
An IPO is when a private company lists on the stock market by selling a portion its business through shares to investors. In September, The Hut Group listed on the UK stock market making it one of London’s largest IPOs to date.
I expect 2021 will be a better year for UK IPOs and so I have compiled a list of five companies I think will go public. I’d consider them for my own portfolio if the prices are right.
# 1 – Darktrace
I think cyber security company, Darktrace could list on the London Stock Exchange (LSE) in 2021 with a £3.8bn valuation. The British firm, which was established in 2013, is in talks with investment banks UBS and Berenberg.
Darktrace provides software to businesses that helps detect cyber threats on their networks. This has proved successful during the pandemic as many people adopted remote working. With cyber attacks increasing, I expect there will be huge demand for the stock and thus will be looking out for the UK IPO next year.
#2 – Trustpilot
Another UK IPO on my radar is online rating platform Trustpilot. There are reports the company has lined up JP Morgan and Morgan Stanley as global coordinators of an IPO that could value it at £800m.
I like Trustpilot as it’s a leader in the online review space and earns revenue by customers subscribing to its services. The company is working to clamp down on fake reviews, which I think will improve its credibility. I’d certainly be waiting eagerly for a Trustpilot UK IPO.
#3 – Deliveroo
Food delivery business Deliveroo hinted at an IPO in 2020 after its merger talks with Uber collapsed. I think a 2021 listing could be likely as it can ride the wave of its success during lockdowns.
The pandemic has given Deliveroo a boost as more people enjoyed stay-at-home meals. The London based firm could be valued at more than £3bn. High-profile companies, such as Amazon have invested in Deliveroo and many investors, like me, will be looking out for this UK IPO.
# 4 – BrewDog
The Scottish craft beer brewer has been considering an IPO for a while but was waiting for the right market conditions. The coronavirus crisis has been tough for it, but its growth has still been impressive.
BrewDog has undergone several capital raising rounds including crowdfunding via Crowdcube. An IPO would give current investors an opportunity to make a return on their investment.
While a UK listing seems likely, BrewDog has not ruled out a US flotation. An IPO would provide the company with long-term liquidity. In 2017 the company attracted a £1bn valuation when TSG Consumer Partners invested in the business. BrewDog’s IPO is on my radar.
#5 -EG Group
A huge IPO could be on the cards for EG Group, the owner of petrol stations and fast food outlets. The listing could value the company at £10bn.
The Issa brothers, who control EG, recently teamed up with private equity firm TDR Capital to buy Asda from Walmart in a £6.8bn deal. This monster acquisition has placed it on the radar if many investors. I think EG’s UK IPO will be interesting for the market due to its business mix and I will be watching out for this stock.
Nadia Yaqub has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.