This article originally appeared in Bloomberg.
In early April, Rakesh Shaunak made a decision few executives in his position were willing to make at the time, to go ahead with an initial public offering just as US President Donald Trump was kicking off his trade war, roiling markets.
Since Shaunak’s company, the auditing firm MHA Plc, pulled the trigger on the £98 million ($132 million) IPO on the London Stock Exchange’s AIM market, the shares have rallied 33% amid a wave of optimism that economic growth will hold up even in the face of tariffs.
MHA’s decision to go ahead with the offering and the subsequent stock gains show that some companies can be rewarded for boldness this year at a time when there are plenty of reasons to be timid. The outcome is also a much-needed win for the LSE, amid its slowest first-half for initial public offerings in 28 years and a drive to attract and retain listings.
"I satisfied myself that all the basics were right"
"It was a point in time thing; we believed in ourselves, in our business, in the markets. It was absolutely the right thing to do."
On the evening of March 31, as the firm was due to stop taking orders from cornerstone investors, Shaunak sat in his home office wrestling with the question of whether to yield to tariff-related volatility.
Having convinced himself that the time was right for the IPO, the next morning he spoke to his chief financial officer and then the board of the firm he had spent the last 30 years helping to build, and they agreed to proceed.
On April 2, the US president unveiled his placard of so-called reciprocal tariffs that sent shock waves through global markets. Companies from New York to Seoul decided to shelve their IPOs due to the uncertainty.
Still, by April 6 — after a week in which the FTSE 350 had fallen 7% — the equity partners of MHA approved the changes needed to the firm’s structure for it to go ahead with the offering. The share sale raised about £98 million, after originally planning to seek up to £125 million.
As an audit and advisory firm, MHA didn’t feel a direct business hit from the threatened tariffs. In fact, some clients who are affected by them have been turning to the company for advice and planning, Shaunak said.
On April 15, when Shaunak stepped up to ring the bell at the London Stock Exchange he said a little prayer: “Dear God, please let it be green, not red.” The stock gained 2.5% in its debut.
Now with the stock rallying, some investors are getting in touch expressing an interest in taking part in potential further offerings, Shaunak said. MHA intends to return to the markets, although there are no imminent plans, he said. The company has said it will use the money raised from the IPO mainly to repay loans, but also to invest in applying AI-related technology and acquisitions.
MHA’s IPO was two years in the making. It started with visits from the London Stock Exchange’s primary markets team, who interested Shaunak in the idea of long-term investors who take a supportive position, but don’t direct the business.
That was in contrast to private equity firms that had been courting MHA, he said, but had ultimately been deemed a non-starter.
“The main negative was the timescale of the thinking,” he said of private equity. “It was all very short term and all very Ebitda driven. That for us just doesn’t work because we’re not a commodity-based business.”
