Misys IPO shelved amid Brexit uncertainty

Misys has cancelled its initial public offering (IPO) after Brexit uncertainty hit its attempts to raise money on financial markets in London.

The core banking, risk, reconciliation and financial services technology provider, Misys, has abandoned its planned float on the London Stock Exchange due to “market conditions”.

It is understood Misys had originally planned a £5.5bn float, valuing in the same range as its rival Temenos, but underwriters cut the enterprise value by 20% into the £4.1 to £4.7bn range, according to ‘Reuters’, placing it alongside UK accounting technologists Sage, after the initial public offering (IPO) hit Brexit headwinds.

Misys is owned by Vista Equity Partners who took it private in 2012 and have already had one abortive attempt to take it back market. The firm had hoped to raise at least £500m from the float to help it pay down debt.

In a statement Misys said it has “decided not to proceed… at the current time due to market conditions”.

Due to the uncertainty about if the UK will remain part of the European Union (EU) single market after Brexit and, crucially, if its firms will gain the ‘passporting’ rights that are so important to financial services firms and those that sell to them, many firms are finding it difficult to get IPOs off the ground at the moment.

Telefonica’s boss, for instance, Mark Evans cast doubt on the planned £10bn float of its UK O2 subsidiary recently, reportedly saying that the firm was “prepared but not committed” to the float and that it would decide next year, depending on market conditions.

Others to have cancelled or postponed recent IPOs include energy provider First Utility, fitness chain Pure Gym, and vehicle part-maker TI Fluid Systems. Biffa, the waste management company, also cut the price of its flotation after failing to get enough investor support.

Misys had tried this tack too, and is also understood to have approached UK authorities about if offering less than the usual 25% minimum might also be possible for its float, but it was all to no avail.

The possibility of a hard Brexit, where the UK loses access to the EU single market but regains control of labour movement, has spooked investors, sent the pound tumbling and caused widespread uncertainty. Misys’ IPO is another casualty.

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