After a subdued summer, the latest figures show that the drought on the London stock exchange shows little sign of improving.
According to EY figures cited by The Times, city floats have raised £953m from 23 companies so far this year, compared with £1.2bn from 34 companies at the same time in 2022.
Floats for companies like Arm and Instacart in recent weeks have raised hopes that such mega-deals could revive global capital markets.
But only five companies chose to debut on the London Stock Exchange between June and August, compared to eight last summer. The amount raised over the three months also fell by 36%, from £565.5m to £359.8m.
A variety of factors continue to slow demand for large IPOs: continued high interest rates, tight financing conditions, sluggish economic growth, volatile markets, persistent inflation, fears about China’s real estate market and geopolitical tensions from Asia to Europe and North America still swirling.
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British politicians and regulators have been particularly proactive in trying to stem the drought in London after the U.S. won some of the few coveted listings and acquired some other companies that had migrated to the U.S. in search of higher valuations and liquidity.
However, amid fears that too many reviews could cloud the picture and lose focus, the Capital Markets Industry Taskforce, an industry group with executives from Schroders, Barclays and Latham & Watkins, is now considering delaying its report – which is designed to be a single report became the final blueprint for the future — until next year, say people familiar with the situation.
Reduced capital market activity also continues to weigh on transaction fees and lead to thousands of job cuts at leading banks. However, some expect a recovery to be imminent.
Scott McCubbin, EY’s head of IPO in the UK and Ireland, told The Times that “several companies that postponed their IPOs earlier this year are now planning to be ready to go public when headwinds ease.” He expects a recovery in 2024 as the surge in activity in the U.S. spills over into other markets.
City leaders continue to fight back. Julia Hoggett, head of the London Stock Exchange, told a recent conference that more than half of the 23 British companies that have raised more than $100 million in the U.S. over the past decade are now listed.
British software group WANdisco, one of the firms that had considered adding to the exodus from Britain with an IPO in New York, has since faced an investigation into its accounts by the Financial Conduct Authority, announcing on October 4th that it would be renamed Cirata as part of a restructuring.
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