What is the ‘new normal’?

Paul Blythe
08 June 2020


I last wrote to you from a pre COVID-19 landscape with a sense of optimism for the year ahead. As we all know, the world has been turned upside down by the rapid and tragic spread of the virus since then and we are now all emerging from the lockdown and wondering what the ‘new normal’ holds in store for us.
As readers of this guide, you will likely be categorised as ‘white-collar city workers’, irrespective of profession or location. Your day-to-day work habits have involved a commute to your office and regular interactions with clients and colleagues. In more recent years, agile and flexible working for individuals has been brought into the mix, along with scalable office facilities for companies. At the start of the year, the old adage of 70 desks per 100 employees was being tested.
As we are now starting to emerge from lockdown, thoughts are turning to our office spaces, travel and working practices within the ‘new normal’. Popular consensus from facilities managers suggests that the post COVID-19 ratio will be more along the lines of 30 desks per 100 employees. Remote working is now a proven concept as a direct consequence of the lockdown and, for city-based tenants, the question as to how much office space is actually required is now high on the agenda. Obviously, less office space equates to less rent and rates which always helps cashflow.
Similarly, the rise of video conferencing during the lockdown has demonstrated that not all meetings need to be conducted face-to-face. As an extreme example, the historical IPO roadshow format involved presenting to potential investors from across 15 countries in 15 days. Lockdown IPOs in the US have all been conducted by video conference and the vast majority have met their targets. This has led to a scratching of heads and the question “why did we use to do that?” Obviously, there is no substitute for face-to-face meetings in certain circumstances and there will always be a need for them, but their frequency has been challenged successfully. Again, fewer face-to-face meetings results in less travel, which always helps cashflow.
Lockdown conversations with my ‘white-collar city workers’ have often disclosed the fact that we have been more efficient in our work than we were historically. This is largely due to the fact that we are all saving time on our daily commute and that we are able to avoid the numerous distractions that office life usually brings. Suddenly, we are in charge of our daily diary and can manage our time more efficiently. As always, improved efficiency must be a good thing.
All of the above will continue to evolve and change as we emerge from lockdown and start making our way through to the end of the year. Personally, I doubt that we will have returned to anywhere near ‘normal’ by then and so the lessons we have learned during lockdown should be embraced and form the basis of how we work in the future.
Turning now to the markets. During the three-month period ended 30 April 2020, AIM saw a mere five new issues raising £56 million. Surprisingly, both of these figures are broadly comparable to 2019 and for those us working in this market, this is a reminder of how difficult a year 2019 was. Secondary issues fared much better with £1.3 billion raised, a figure which is only 20% down on 2019. Taking into account the 16 cancellations during the quarter, AIM now stands at 840 issuers, its lowest since 2003. As can be expected given the turbulent sell-off of equities during the period, the aggregate market capitalisation of all AIM companies fell 15% from its year end position of £104 billon to £88 billion. As at 30 April 2020, 15 companies had a market capitalisation of over £1 billion, with Boohoo Group retaining its position at the top of the tree at £3.77 billion. It is difficult to draw meaningful conclusions from the data given the underlying conditions but, in the round, AIM appears to be faring reasonably well in difficult circumstances.
The Main Market fared marginally better than AIM, with 12 new admissions and 19 cancellations, resulting in a net loss of seven companies during the quarter. As at 30 April 2020, there were 1,131 issuers on the exchange. New monies raised totalled £412 million which, when added to secondary issues of £3.9 billion, resulted in total funds raised of £4.3 billion. As at 30 April 2020, the aggregate market capitalisation of all Main Market companies was £3.0 trillion, with 320 companies having a market capitalisation of over £1 billion.
I wish all of you and your families a safe and healthy quarter.