"It is encouraging to have seen a steady flow of new entrants throughout the year with a marked increase over 2003, although it has not been plain sailing," said Neil Austin, head of new issues at KPMG Corporate Finance. "A number of IPO candidates had to revise pricing or downsize their offer in order to get away."

The Alternative Investment Market also had a successful year, with 226 IPOs raising a total of £2.6 billion. This is up from 66 IPOs raising £986 million in 2003 and makes 2004 the highest year by value and volume since the market's launch in 1995.

According to data from analyst Dealogic, all global regions recorded an increase in IPO activity compared with 2003. Europe experienced the greatest rise with 327 IPOs raising some £22 billion, five times the value and treble the number of deals compared with 2003. The most active European exchanges by value and volume were the UK and France.

Several companies are reported to be considering an IPO in the UK during 2005, including soft drinks business Britvic, pharmaceutical company ProStrakan, and Russian tyre producer Amtel. "The pipeline is populated with a limited number of high quality companies," Austin said. "We still have a supply issue. There are no 'hot' sectors to provide the volume of IPO candidates we witnessed a few years ago and the market is demanding established high quality companies so we are not going to see large numbers of suitable candidates in the queue."

Tom Troubridge, head of accountancy firm PricewaterhouseCoopers' London capital markets group, said that although sentiment improved during the last quarter of 2004, the outlook for the 2005 IPO market is still unclear.

"Increasing regulation on the public markets and alternatives available to companies such as private equity lead us to be cautious about predicting IPO activity in 2005," he added. "The uncertainty around the impact of the new Prospectus Directive and in particular the requirement for 2005 IPO candidates to produce IFRS information at some point during the year may cause delays in the IPO pipeline. Conversely, the negative reaction in certain parts of Europe to Sarbanes-Oxley is causing non-US companies to look at other markets outside of the US and Europe could be a beneficiary as a result."