The IPO market has spluttered into life, providing a boost to financial PR firms, but the industry is tailoring business models away from financial transactions as deals dry up.
The tepid new listings market was given a boost last week, with three names announcing their intention to float on the London Stock Exchange.
On Thursday, Ocado, the online supermarket delivery service, confirmed its eagerly anticipated £400m listing on the LSE, with City PR heavyweight Brunswick handling financial comms. The unconventional listing offers customers who have spent more than £300 this year the chance to buy shares in the firm, which has yet to turn over a profit in its ten-year history.
The following day, Finsbury picked up a listing brief for Vallar, a mining investment vehicle established by a team that includes Nat Rothschild.
Thirdly, FD-advised coal-producer Scottish Resources Group is looking to raise more than £200m in an IPO next month. These moves come on the back of the recently successful flotations of Capital MS&L-advised Essar Energy and FD-led Jupiter Fund Management, as well as a forthcoming Fairfield Energy deal with Pelham Bell Pottinger.
The raft of IPOs suggests a recovering market, but listing conditions have been extremely difficult, with a number of high-profile names such as New Look and Merlin Entertainment scrapping their planned float.
'Conditions are still tough,' said Richard Campbell, MD at Capital MS&L. 'Investors are definitely looking very carefully at specific transactions and specific deals as to whether they have got a good growth story behind them.'
These tough market conditions have kept bumper project briefs to a minimum, and although new listings are fought over primarily for the future retained client, the top financial PR firms have been moving their business models away from a reliance on winning big-fee projects.
Big agencies such as Brunswick and FD are now more focused on international corporate issues management and cannibalising business traditionally held by more corporate-centric organisations such as Hill & Knowlton and Burson-Marsteller.
City firms have also been expanding aggressively internationally as new business opportunities are very limited in the domestic UK market.
James Henderson, MD of Pelham Bell Pottinger, noted: 'It is certainly true that on the bigger briefs you need more of an international network than before.'
Campbell argued that the most recent new battleground for agencies has been the Middle East, is now shifting to Russia and will soon see UK-based agencies clambering for market share in India.