The COVID pandemic hit listed legal services businesses in the UK, but there may now be revived interest in legal IPOs
The Pandemic certainly ‘hit’ the legal services sector for listed companies, but there may now be renewed interest in legal service IPOs following a bounce back from the COVID hit.
The recent news of the deal by RBG Holdings to acquire Memery Crystal in recent days is the most recent example.an example.
The first listed UK law firm, Gateley, came onto the UK market in 2015 and there has been high interest in the sector, despite almost all the listed law firms on the London exchange taking a COVID hit.
Law Gazette report that DWF, which floated in 2019 and saw high share prices before then losing more than one third of their value in a month.
The company’s shares reached a record low of 53p in early July. Since then, DWF Group shares have begun to climb but remain well below their 2020 peak, at 87.5p at the time of writing.
However the recovery in share price was not without drastic action.
DWF replaced chief executive Andrew Leaitherland in May and announced job cuts and the closure or scaling back of operations in Cologne, Dubai, Singapore and Brussels.
Shares in Anexo, a credit hire and legal services firm, also experienced a similar fate to DWF with their shares dropping to 103.5p at the end of March 2020 from 185p the month before. While shares recovered slightly in the subsequent lockdowns, they remain well below their peak in 2019 and early 2020.
However, most listed law firms have rallied strongly in the wake of the first lockdown. Shares in Knights, Gateley and Keystone Law were all significantly higher on 22 March 2021 than on 23 March 2020, when Boris Johnson announced the first UK lockdown. While there have been some peaks and troughs along the way, legal businesses have mainly proved resilient.
As a result, interest in new flotations appears to be building. According to national media reports, Irwin Mitchell has revived flotation plans dating back years, with hopes of securing a £500m valuation. Meanwhile, in 2019, Mishcon de Reya was believed to have appointed bankers to advise on going public.
Financial analysts have said that the legal services market was considered risky as the pandemic took hold. However times have changed for the listed legal services market and it did not take long for the sector to demonstrate its resilience as law firms showed their ability to adapt and thrive in the new, environment.
More activity and profits are expected as the sector continues to grow.