London market exits outpace IPOs as takeover bids dwarf new listings

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London exits vs IPOs

Highlights

UK market saw just seven listings raising £577.2 million in H1 2024, dwarfed by nearly $200 billion in overseas-led takeovers out of $324 billion M&A.
London's listing activity significantly lags the U.S., where 72 IPOs raised $128 billion led by the $86 billion SpaceX float in the first half of the year.
Regulators and government are easing listing rules and weighing the removal of overseas pension tax incentives to boost domestic London market participation.

IPO slowdown and takeover imbalance

As first reported by the Financial Times, departures from the London market continue to far exceed new listings as foreign acquirers drive much of this year's UK dealmaking. Of the $324 billion in total UK M&A value through late June, nearly $200 billion comes from overseas buyers acquiring domestic assets.

There have been just seven listings in the first half of the year, raising a combined £577.2 million, according to EY. The £2.2 billion total market value of those new listings is largely driven by the flotation of a stake in Uzbekistan's national investment fund, highlighting the limited scale and appeal of this year's pipeline.

That weak issuance backdrop adds to concern about London's ability to replenish companies leaving the market. Charles Hall, head of research at Peel Hunt, says inflows of companies coming to London are nowhere near enough to offset outflows and calls for urgent action.

Pressure on UK equity finance

The shortfall in listings adds to broader anxiety over the UK's standing as a global centre for equity finance, as London struggles to compete with Wall Street's deeper and more liquid markets. By comparison, the U.S. records 72 listings raising $128 billion in the first half of the year, led by the $86 billion SpaceX float.

The government, regulators and the stock exchange are trying to stem the decline by easing listing rules, including requirements on free floats and disclosure. Andy Haldane, the former Bank of England chief economist who is advising the UK's likely new prime minister, Andy Burnham, recently proposes removing tax incentives for pension investments overseas to encourage more domestic allocation.

Supporters of the City argue that London still outperforms Europe in capital raising and point to possible IPO candidates later this year. Some expected deals, including a 19 billion euro flotation of software group Visma and an IPO of online travel agent Loveholidays, are delayed by external factors including the so-called SaaSpocalypse and the Iran war.

Mark Austin, a partner at Latham & Watkins and member of the UK's Capital Markets Industry Taskforce, says the UK now has the least frictional listing regime in Europe and argues that reports of the market's decline are overstated.

Our earlier article on the proposed merger of the multilateral defence mechanism (MDM) and the Defence, Security and Resilience Bank (DSRB) explained how UK Chancellor Rachel Reeves wants overlapping defence-finance initiatives combined into a single structure. We noted that the aim is to secure lower-cost funding and tighter coordination of procurement among allies, with Canada playing a pivotal role in the talks.

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London market exits outpace IPOs as takeover bids dwarf new listings

Highlights

IPO slowdown and takeover imbalance

Pressure on UK equity finance

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