P2P lenders urged caution with stock market floats - P2P Finance News
Peer-to-peer lenders have been warned against rushing to go public.
Zopa and Shojin Property Partners are among the latest P2P lenders to have signalled intentions to launch an initial public offering (IPO).
But Alex Green, co-founder of Globacap, which helps private companies raise funds, warns that firms should not rush into a stock market debut.
Research by Globacap found half of UK businesses have changed their IPO plans as a result of the administrative burden associated with it.
Its analysis also found that despite 25 per cent of firms currently moving towards an IPO, 90 per cent of chief financial officers want to remain private.
“One of the main benefits of maintaining a private company is that there is less administration and fewer reporting requirements,” Green said.
He said companies such as Zopa are large and successful enough to do well with an IPO but warned all firms should be aware of the risks.
“There are some potential problems for IPOs,” he said.
“You only have to look at the experience of Deliveroo which listed and its price dropped.
“An IPO can perform poorly for a variety of reasons such as the market, company specific sentiment or sometimes it can be mispriced.
“An IPO isn’t a bad thing but firms should be aware of the alternatives.”
Zopa, the world’s oldest P2P lender, said in June that it was planning to list in London next year or in early 2023.
Shojin Property Partners has also said an IPO could be part of the platform’s roadmap.
Speaking at the P2P Investing Summit, a virtual event hosted by Peer2Peer Finance News and AngelNews last month, Jatin Ondhia, Shojin’s chief executive, said the platform plans to go public or get bought out in three years’ time.
Funding Circle is the only UK P2P lender to have gone public to date.
It entered the London Stock Exchange in 2018 with an IPO price of 440p but was trading at around 128p in mid-July.