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The London Stock Exchange is on track for its worst year for departures since the financial crisis, with fears growing that more FTSE 100 companies will exit the UK in favor of New York.
88 companies have canceled or transferred their primary listing from the main London market this year, with only 18 taking their place, according to a report. London Stock Exchange Group.
This represents the largest net outflow of companies from the main market since 2009, while the number of new listings is also on track to be the lowest in 15 years, as initial public offerings remain rare and bidders target London-listed groups.
The exodus has continued despite efforts by the UK government, regulators and the London Stock Exchange to enhance the city's attractiveness Reform market rules and the local retirement system.
Ashtead, the equipment rental company with a market value of £23bn, this month became the latest major company to propose… Moving Its basic menu is from London to New York. It will join six other FTSE 100 groups that have ditched the leading index in favor of the outdoors since 2020.
Including Ashtead, these movers had a combined market value approaching £280bn on Friday – about 14 per cent of the current total value of the FTSE 100 index.
The defectors include £39bn gambling giant Flutter, which owns Paddy Power, and £55bn construction materials group CRH. Both have moved their main roster to New York within the past 18 months.
A series of takeovers by private equity bidders has also exhausted the stock market. Darktrace Cybersecurity Group and Hargreaves Lansdowne investment platform Among those I agreed to purchase this year.
Charles Hall, head of research at broker Bell Hunt, said: “We cannot be taken seriously as a global leader in finance if we do not have a thriving capital market.”
“The UK market has no God-given right to be a leading place to list, but it requires sponsorship and support to be successful in an increasingly global market,” Hall said, adding that “more companies will leave” unless action is taken. be taken.
Factors cited by companies moving their primary listing to New York include a larger pool of investors and the potential for improved liquidity in their shares.
For some, the move reflects the growth of their North American operations. Ashtead makes 98 per cent of its operating profits in the US, while Ferguson Plumbing Group, which moved in 2022, gets 99 per cent.
Nine companies in the FTSE 100 get more than half of their revenue from the United States, according to Bank of America, including data group Experian and education company Pearson.
analysis The Financial Times last year identified London as the European stock exchange most at risk of major companies leaving for the United States.
The analysis ranked companies based on their valuation discount compared to a group of US peers, the share of their revenue generated in the US, and the proportion of North American investors on their books.
Rio Tinto and British American Tobacco are among the 18 large groups listed on the London Stock Exchange that have been identified as being at flight risk. The pair has been under pressure from investors to move its primary listing to Australia and the US, respectively.
“More UK companies are considering moving their listings to the US, and the valuation gap between the UK and the US is becoming larger,” Goldman Sachs said in a note on Friday.
The FTSE 100 Index, geared towards “old economy” sectors such as energy and mining, is up about 8 per cent this year. The US benchmark S&P 500 index – home to higher-growth stocks such as technology groups Magnificent Seven – gained about 27 per cent over the same period.
French pay-TV company Canal+ could be valued at more than €6 billion after listing in London on Monday as part of… Its split From the media group Vivendi, according to analysts and people close to the operation. This valuation would make it the largest IPO listing in London since Haleon was spun off from GSK in 2022.
But a senior banker in London said they expect to move more listings to the US next year, especially among fast-growing companies. “The US is now such a large capital market compared to elsewhere that people (generally) feel they will get a better deal in the US,” he said.
Sharon Bell, European equity strategist at Goldman Sachs, said many companies looking for higher valuations felt forced to move away from the UK due to a lack of local investor interest.
“It's very sad,” one FTSE 100 chief executive said after Ashtead's announcement. The executive added that President-elect Donald Trump's “America First” rhetoric could also prompt companies to accelerate any delisting plans.
Many consultants and executives privately say that recent reforms – including planned changes to the pension system repair From UK listing rules – the dial has not been moved yet.
But LSE and EG Chairman David Schwimmer said last year that the idea that a US listing offered a higher valuation was correct. “legend”.
City councilors hope the UK market will get a boost if the Chinese-founded fast fashion group Shin It is moving forward with its planned IPO In London.
“Companies will make tailored decisions relevant to their business mix and location,” LSEG said in a statement. “The UK market remains the third largest in the world in terms of capital raised year to date and is experiencing the most dynamic set of reforms anywhere in the world.”
Chancellor Rachel Reeves said on Friday that the Canal+ listing was “a vote of confidence in the UK capital markets, the stability we offer and our plan for change”.
But one FTSE 250 executive said more needs to be done to attract investors.
“I don't think this is high on the government's list of priorities, even if it is something that comes up regularly,” the executive said.
Conceptualized by Alan Smith and Patrick Mathurin. Additional reporting by Evan Livingstone and Mary Novick in London
