The exodus from London Stock Market (LSM) has reached alarming levels, with 154 takeover bids worth £165 billion in value since January 2023, compared to just 11 Initial Public Offerings (IPOs) of similar scale. This disparity points to a stark reality: companies are increasingly being acquired or opting out, rather than listing and growing on the London market.
Charles Hall from Peel Hunt highlights that seven large firms, including Flutter and Wise, have relocated their listings to markets like New York over the past three years and six months. This has resulted in a £120 billion loss of market capitalisation for the UK. Furthermore, eight UK companies have chosen to conduct IPOs overseas, collectively representing an estimated £330 billion in market capitalisation.
Shadow business secretary Andrew Griffith has voiced his concerns about 'epic self-harm', pointing to regulatory frameworks and 'ivory tower financial regulators' as contributing factors to the decline of London's appeal. There is a growing consensus among City players and law firms like Addleshaw Goddard that meaningful reforms are necessary to revitalise LSM.
Proposed solutions include abolishing stamp duty on shares, adjusting capital gains tax to encourage domestic investment, and incentivising UK pension funds to invest in domestic equities. The sentiment is clear: without significant policy changes, more companies will likely opt for overseas markets, a concern underscored by projections suggesting more UK companies may list in the US this year than in the UK.
The Bank of England continues to monitor the health of the UK's financial markets closely, as a robust capital market is vital for economic growth and stability. A shrinking pool of listed companies could have far-reaching implications for investment flows, job creation, and the UK's global standing as a financial centre.