Filenews 16 December 2024
Companies are leaving the London Stock Exchange en masse, which is experiencing its worst year in terms of company delisting since the financial crisis.
According to data from the London Stock Exchange Group, cited by the Financial Times, a total of 88 companies have delisted or moved their main listing from London's main market this year with just 18 taking their place. This marks the largest net outflow of companies from the main market since 2009, while the number of new listings will also be the lowest in 15 years as initial public offerings remain scarce and bidders target London-listed groups. The exodus continued despite efforts by the UK government, regulators and the LSE to boost the city's attractiveness by reforming market rules and the domestic pension system.
Ashtead, the equipment rental company with a market capitalisation of £23 billion, this month became the latest major firm to propose moving its main listing from London to New York. It is one of six other FTSE 100 groups to abandon the blue-chip index in favour of overseas countries as of 2020. Including Ashtead, the companies in question had a combined market valuation close to £280 billion on Friday – about 14% of the FTSE 100's current total value.
The defectors include gambling giant Flutter, worth £39 billion, which owns Paddy Power, and building materials group CRH worth £55 billion. Both have moved their main listing to New York over the past 18 months. A series of buyouts by private equity bidders has also depleted the stock market. Cybersecurity group Darktrace and investment platform Hargreaves Lansdown are among those that have agreed to buy it this year. "We can't be taken seriously as a global leader in finance if we don't have a thriving equity market," Charles Hall, head of research at brokerage firm Peel Hunt, told the FT. Nine FTSE 100 companies derive more than half of their revenue from the U.S., according to Bank of America, including data group Experian and education firm Pearson. Analysis by the Financial Times last year identified London as the European stock market most at risk of major company departures in the US.
The analysis ranked companies based on their valuation discount compared to a U.S. peer group, the share of their revenue generated in the U.S., and the percentage of North American investors on their registry. "More U.K. companies are considering moving their U.S. listings, and the U.K. valuation gap in the U.S. has become wider," Goldman Sachs said in a note on Friday. The FTSE 100, which is geared towards sectors of the "old economy" such as energy and mining, has gained nearly 8% this year. The benchmark U.S. S&P 500 index — home to higher-growth stocks such as tech conglomerates Magnificent Seven — has gained about 27% over the same period. French pay-TV company Canal+ could be valued at more than 6 billion euros after listing in London on Monday as part of its split from media group Vivendi, according to analysts and people close to the firm. This valuation would make it the biggest main listing in London since Haleon was shut out of GSK in 2022.
Betting on Shein
City councillors hope the UK market will get a boost if China-founded fast-fashion group Shein goes ahead with a planned IPO in London. "Companies will make bespoke decisions related to their business mix and location," LSEG said in a statement. "The UK market remains the third largest in the world based on funds raised from the year to date and is seeing the most dynamic set of reforms anywhere in the world." Chancellor of the Exchequer Rachel Reeves said last Friday that the introduction of Canal+ was "a vote of confidence in the UK's capital markets, the stability we offer and our plan for change". However, one FTSE 250 executive said more needed to be done to attract investors. "I don't think it's high on the government's priority list," the executive said, "even if it's something they do regularly."
