Popular book retailer Waterstones and digital banking provider Monzo are two exciting businesses that could enter the public market this year, according to experts.
Initial public offerings (IPOs) are vital for the lifeblood of a market. As companies leave, whether through mergers and acquisitions, delistings or collapses, new stocks are required to make sure investors have a suitable amount of choice available to them.
On the surface, 2024 was a poor year for IPOs in the UK. Around 88 companies, including Flutter and Ashtead, delisted from the UK stock market last year, and earlier this month, there were fears that Santander may be the next to exit.
Scott McCubbin, UK IPO leader at EY, said this marked the largest outflow of companies from the market “since the global financial crisis”.
However, it was not all doom and gloom. For McCubbin, there was potential for a recovery in 2025. He explained that listing reforms and interest from high-profile companies could all lead to several private companies listing in the UK or US this year.
Waterstones
For Dan Coatsworth, investment analyst at AJ Bell, book retailer Waterstones stood out. In 2018, the business was purchased by hedge fund Elliot Advisors, which also owns the US business Barnes and Noble.
This combination, Coatsworth argued, has made the enlarged Waterstones into a “shining example of a retail turnaround story that has worked wonders” and brought new attention for an IPO.
The analyst explained that, post-pandemic, demand for book sales was “much stronger than expected”. This has allowed Waterstones to transform and grow, whereas competitors have faded away.
He argued the business has successfully diversified its income where other booksellers have failed. Waterstones has expanded into products such as greeting cards, tote bags and board games instead of relying on just book sales. “These extras all have a sense of curated quality around them", which Coatsworth argued contributed to Waterstones popularity.
As a result, the brand has become even more well-known in the UK, which Coatsworth argued would “play to its strengths in the event of a London listing”. Moreover, as a relatively “low-growth story” he explained that it was likely to pay “generous dividends to attract investors”, making it a potentially very exciting opportunity for income seekers.
However, he conceded that the UK arm of the company was a relatively small part of the enlarged business, with most of the revenue stemming from the US. As a result, Coatsworth said it may benefit more from listing on the US market this year.
Monzo
For analysts at IG Group, an interesting potential IPO this year could be online banking provider Monzo. First established in 2015, it has more than 9 million customers and 400,000 business clients and was valued at $5.9bn in 2024, according to the IG team. Analysts added in October last year that it is the UK’s seventh largest bank despite lacking a physical store.
An IPO would allow the business to grow substantially and become a challenger to traditional UK banks, they said. Moreover, Monzo’s chief executive officer, TS Anil, has said the business will make a great public company one day, which could offer an exciting prospect for investors.
“Although there has been little talk of an IPO in recent months, it’s reported the company is still exploring the idea, and we could see it float in 2025,” the IG analysts said.
However, several challenges to a potential IPO have emerged. Notably, the firm benefitted substantially from net interest income in 2023 to recover some of its sizeable losses. With interest rates currently falling, this could challenge the business's hopes of going public, IG explained.
Moreover, while senior management has expressed interest in going public, Anil commented late last year: “It is too early for us to talk about the IPO. We are incredibly well capitalised. We do not need to raise capital. We are focused really on continuing to scale the business”.
Gymshark
John Moore, senior investment manager at RBC Brewin Dolphin, was optimistic about the IPO calendar of 2025. He said: “It will be fascinating to see what the IPO activity ends up being and what success will be in share price terms – 2025 will be an interesting year.”
Despite a “marked reduction in IPO activity” since the pandemic, Moore argued that 2025 has several “interesting, longer-term growth plays” that could join the market.
One example he highlighted was the British fitness and apparel brand Gymshark. Since its establishment in 2012, the company has become a well-recognised brand and expanded its operations domestically and internationally, he said.
Its Regent Street office opening in 2022 was “a milestone in its journey” and performed well above expectations, Moore added. It rapidly followed this up with further store openings, including one in Stratford last year and one in Dubai earlier this month.
Given this, Moore argued: “Perhaps, an IPO, to join others in the alternative sports brand arena, such as ON and Lululemon, will be a further mark on its journey to taking on the establishment.”