Saturday, 18 May 2024

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LSE CEO: Listing flight not a big concern as U.K. is ‘punching above its weight’

LSE CEO: Listing flight not a big concern as U.K. is 'punching above its weight'

London’s status as Europe’s top financial hub has been at risk for the last few years.

There are now 25% fewer companies listed on the U.K. stock market than there were a decade ago, reflecting both a long-term downward trend in IPOs and some high-profile delistings. This trend is not confined to one industry, with tech and construction firms among those to either opt for listings overseas or go private.

The alarming state of affairs has even prompted the CEO of Shell—which tops the Fortune 500 Europe and is overwhelmingly the FTSE 100’s biggest company—to consider packing up for the U.S.

Yet London Stock Exchange’s CEO Julia Hoggett seems optimistic. She argued that “there’s no sense of panic” as the country is “already punching above its weight,” in comments made to the BBC on Thursday.  

Hoggett said that the runaway growth of U.S. tech giants, including Google and Apple (which, on its own, is worth more than the top 100 London-listed companies), skew the perception of London’s bourse in comparison. 

“When you strip them out and look at the actual companies of similar sizes in the U.S. to the sort of company size that we have in the U.K. They haven’t really been out-performing,” Hoggett said, adding that because London has “all the fundamentals,” she feels optimistic.

Does she have a point?

London does have the fundamentals for a major exchange, not least the powerful ecosystem of investment banks, lawyers and institutional investors that make the City one of the world’s most important financial centers.

But given the recent slew of bad news, it’s hard to see the bright side when it comes to the public markets. Take Cambridge-based chipmaker Arm, for example, which launched 2023’s biggest IPO in September. Although the company is British, it opted to list in New York, earning a valuation of over $54 billion. 

Flutter Entertainment, an Irish sports betting company with a £29.7 billion ($37.6 billion) market cap, also recently voted to move its primary listing to the U.S. by the end of this month, while Germany-based TUI is soon to delist from London in favor of Frankfurt.  

Although there has been some good news—this week, computer maker Raspberry Pi said it’s planning to list in the U.K.—the fact remains that flotations are thin on the ground, with the number of applicants hitting a six-year low in 2023. 

It has even jeopardized London’s once unassailable…

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