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The value of bids for companies on London Stock Exchange is 27 times greater than the value of new entrants so far this year, raising fresh fears about the shrinking of the UK’s public markets.
Despite initial hopes that 2026 would spark a revival for the LSE, there have been just seven listings in the first half of the year, raising £577.2mn in total, according to data from professional services company EY.
The total market value of the new listings is £2.2bn, mainly driven by the float of a stake in Uzbekistan’s national investment fund, which also raised the largest amount of all the listings at £511mn.
The dearth of new listings comes as overseas buyers are snapping up UK companies at a record pace.
This year there have been 28 proposed takeovers of UK companies worth more than £100mn, according to separate data from Peel Hunt, with a total value of £59.7bn, or about 27 times the new entrants’ value.
These include private equity group EQT’s £9.5bn move for Intertek, insurer Beazley’s £8bn takeover by Zurich, Castlelake’s £5.5bn bid for easyJet and the £2.7bn acquisition of Tate & Lyle by Ingredion.
The total also includes bids that are still under negotiation or which have been rejected but where an improved offer is still possible under UK takeover rules, such as Prologis’s £12.6bn move for Segro. Even if such deals fell through, the value of acquisitions agreed so far this year for London-listed companies would still far outstrip the value of newly listed companies.
“The problem is that while there are small companies listing in London, they aren’t enough to move the needle,” said Charles Hall, head of research at Peel Hunt. “Let’s not pretend the inflows of companies coming to London are anywhere near enough to make up for the outflows. We need urgent action to address it.”
The buoyant IPO market in the US has served to further underscore London’s problems. There were 72 listings across the Atlantic in the first half of the year, raising $128bn, led by the record-breaking $86bn float by SpaceX.
There had been hopes that London’s listing market would be kick-started this year with a €19bn float of software group Visma, only for a software rout to prompt its private equity owner Hg to pause its IPO plans.
A separate listing of Love Holidays was also thwarted by the travel turmoil caused by the Middle East conflict.
However, IPO advisers say that with markets no longer pricing in interest rate increases and commodities prices stabilising, conditions for potential listings had improved.
Possible London IPO candidates this year include Waterstones, the bookshop chain, and AS Watson, owner of Superdrug, although it is still possible that timetables slip again or that another external shock damps investor appetite.
Scott McCubbin, UK IPO leader at EY-Parthenon, the consulting arm of Ernst & Young, said: “The market is building on the improving conditions seen earlier in the year, with strengthening global momentum supporting a gradual reopening. While activity remains below historic averages, the direction of travel is encouraging, with confidence increasingly translating into execution.”
Others claim London is outperforming Europe for capital raising and has a healthier list of IPO candidates than leading European exchanges. LSE figures show more than £6.7bn was raised in follow-on equity fundraising by companies on its market in the first half of the year.
Mark Austin, partner at Latham & Watkins who sits on the UK’s Capital Markets Infrastructure Taskforce, said: “It’s testament to the reforms of the last few years and the fact that the UK now has the least frictional listing regime in Europe. Popular reports of its death are, as Mark Twain said, greatly exaggerated.”
The government, regulators and stock exchange have tried to attract more companies to list in London by relaxing rules, including on free floats and disclosure requirements. However, many believe that more action is required to encourage more capital to back British companies.
Andy Haldane, the former Bank of England chief economist who is advising the UK’s likely new prime minister, Andy Burnham, recently proposed removing tax incentives on pension investments overseas as a means to encourage a home bias in investment.
