The pipeline of UK flotations for the London stock market has dried up, with investment bankers predicting no sign of a recovery until the autumn.

Figures provided by the London Stock Exchange show that there were just three flotations of UK firms in January and February. They raised £29 million between them. By contrast, before last summer’s credit crunch, initial public offerings (IPOs), which provide bread and butter work for City brokers and other institutions, were running into double figures almost every month and raising billions of pounds of fresh funds.

December, the only month since August when such totals were again reached, was artificially inflated by Kazakh miner Eurasian Natural Resources, which raised £1.5 billion.

So far in March, there have been no flotations, and none are thought to be imminent. Investment bankers say the volatile markets make it difficult to price businesses with any certainty.

Most IPO business dries up in July and August. One investment banker toldThe Timeslast week he was working on four mandates, but none was expected before the autumn. If the market does not recover before the summer break, it will mean a whole year of virtually no activity and raise questions about whether small brokers reliant on such business can keep their teams together.

A Stock Exchange spokesman said London continued to attract flotations from overseas and there were companies keen to move from the Alternative Investment Market (AIM) to a full listing. Meanwhile AIM continued to attract smaller companies.

Last week UA Inter Media Group, Ukraine’s biggest media firm, announced plans to come to the London market but made it clear this would not happen until 2009.

Investment banks such as Citigroup, Deutsche and Credit Suisse are rushing to raise Spacs, or special purpose acquisition corporations, also known as “blank cheque IPOs”. These are formed by specialist management teams that raise money from investors, including activists, and then look for companies to acquire. The target companies, under normal market conditions, would be ripe for an IPO.

Another option is to wait for a fresh round of rescue rights issues, which bankers say will come as market conditions continue to deteriorate. Martin Waller, Siobhan Kennedy

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