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What's going on?

January saw companies raise a record amount of money in their stock market debuts, and February’s looking promising too.

What does this mean?

Over 200 new stocks hit the market in January, and those initial public offerings (IPOs) were worth a combined $49 billion – up from $12 billion the same time the year before. And there are no signs the rush is slowing down. For one thing, demand’s still sky-high: the five biggest American IPOs this year raised more money than the companies were aiming for, while two of Europe’s biggest saw enough orders for every one of the firms’ new shares within 90 minutes. And for another thing, companies are accelerating their plans to go public so they can profit from high stock market prices…

Why should I care?

Zooming in: IPOs are on a high.

Four companies announced they’d be joining the UK stock market on Monday, which should come as welcome news to a European IPO market that lagged behind both the US and Asia last year. One of them is Australian firm MGC pharmaceuticals – the first medical cannabis company to list on the London Stock Exchange since UK regulators gave the green light to do just that. MGC pharmaceuticals – which is developing weed-based epilepsy and dementia drugs – is already listed in Sydney, but it reckons coming to London will raise both its profile and around $7 billion from UK investors.

The bigger picture: This feels familiar.

Not all analysts are sold on the IPO craze: the time might be right for companies to raise money from investors, sure, but they still need a good enough reason to ask for it. Some are even comparing it to the height of the dotcom bubble, when companies were keen to get their hands on investors’ money while the going was good – and we all know how that ended…

Originally posted as part of the Finimize daily email.

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