London’s IPO market has dropped to 20th place globally, raising only $1 billion this year, a 9% decrease. Smaller markets, such as Oman and Malaysia, now surpass the UK in rankings. Increased competition, low valuations, and shifting investor interests have prompted calls for more comprehensive reforms to revive the market.
The London IPO market is facing significant challenges, having fallen to 20th place in global rankings, trailing behind smaller markets such as Oman and Malaysia. Year-to-date, the market has raised approximately $1 billion, a 9% decrease compared to last year. This downturn reflects not only a decline in investor valuations and interest but also the increased competition from emerging financial hubs. Recent government reforms to listing regulations aim to revive interest, but sector experts assert that more comprehensive measures are necessary to restore London’s former stature in IPO markets.
The majority of IPO activity has shifted to the Middle East and Asia, with these regions together accounting for over half of this year’s total fundraising. Notable transactions include the $2 billion IPO by Talabat in Dubai, marking it as the year’s largest tech IPO globally. This is indicative of a broader trend wherein international investors are increasingly favoring local markets that provide higher valuations and visibility. In contrast, London has not seen any listings in the top 100 globally this year, exacerbating its declining market share.
This decline can be attributed to several factors, including chronic low valuations, risk-averse local investors, and increasing competition from other financial centres. According to George Chan, EY’s global IPO leader, the UK’s position is under threat as “governments are doing everything they could to attract more companies to come,” thereby intensifying competition in the sector. Major international listings continue to thrive overseas, drawing companies away from London, as evidenced by Revolut’s CEO’s preference for a New York listing.
As the UK stock market continues to grapple with a prolonged downturn, it faces heightened competition from smaller global financial centres. The decline in the number of IPOs being launched in London marks a sharp contrast to its historical performance as one of the leading venues for international listings. Many firms opt to relocate their primary listings to markets that offer better valuation opportunities and liquidity. This widening gap has prompted UK authorities to implement reforms and adapt listing rules, aiming to increase the attractiveness of London as an IPO destination, particularly for tech firms that previously sought listings elsewhere.
In summary, the UK IPO landscape is experiencing unprecedented challenges, highlighted by its current rank among global markets and the decline in capital raised through new listings. The shift of IPO activity to growing markets in the Middle East and Asia underscores the urgency for the UK to adapt and implement effective strategies to rejuvenate its capital markets. Although recent regulatory changes signal a desire for improvement, substantial efforts will be needed to restore investor confidence and attract new listings to London.
Original Source: www.livemint.com
