In a decade of doom for the London Stock Exchange, more companies are exiting via takeovers than new IPOs are taking place
According to an analysis by the Mail, the London Stock Exchange has lost more companies through takeovers in the past decade than it has gained through new IPOs.
Figures from financial data group Dealogic show that since 2015, 585 companies with a combined value of £779 billion have left the London market because they were bought by competitors or private equity.
That compares with 567 who joined the LSE’s main market or junior division AIM in the same period.
Those companies had a combined value of £66 billion – far less than the companies that left, because many of the new entrants were young companies looking to grow.
The findings will make for grim reading amid concerns about the health of the stock market, the city and the wider British economy.
Although the number of companies with shares traded on the stock market has declined due to takeovers, the LSE has failed to attract replacements through initial public offerings (IPOs), with competitors such as the New York Stock Exchange and Nasdaq consistently entering the country beat when it comes to organizing IPOs. .
Exodus: Figures show that since 2015, 585 companies with a combined value of £779 billion have left the London market because they were bought by competitors or private equity
Samuel Kerr, of Dealogic’s owner ION Analytics, said the LSE has struggled to attract foreign companies to list in London in recent years.
While the forthcoming reforms by the Financial Conduct Authority will make the process easier for companies to survive, he said it remains to be seen whether they will help reverse London’s decline.
‘Much of the slowdown can be attributed to the need to establish a new identity for the LSE since Britain left the European Single Market, with London no longer the English-speaking common law bridge to European markets as it once was,” he said. .
‘The FCA’s new listing reforms have gone some way to reducing the regulatory burden of listing in London. The proof in the pudding will be whether the LSE can attract significant IPO candidates in 2025 and beyond.”
Last year, 60 companies with a combined value of £59.4 billion left the LSE due to takeover. By comparison, only thirteen companies were active in London, with deals worth £725 million.
Since the number of listings in London reached a ten-year high of 125 in 2021, deal volumes have fallen. In contrast, there have been an average of 61 departures from the LSE each year over the same period.
One IPO expected to take place in London is that of Chinese fast fashion giant Shein.
Despite hopes this will spark a turnaround in London’s fortunes, AJ Bell investment director Russ Mold says the deal is far from done.
He explained: “If Shein lands, that’s a big one, but we’re not there yet. It still needs to get regulatory approval due to supply chain concerns.
“I suspect this deal ultimately comes down to valuation and will likely be valued lower than its publicly traded peers, even with the IPO discount.”
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