LSEG signage is seen on screens in the lobby of the London Stock Exchange in London, Britain, May 14, 2024.
Hannah Mckay | Reuters
London’s listing problem isn’t limited to the capital, with weakness in the U.S. and Asia too, according to the head of the London Stock Exchange Group.
According to EY, there were just 18 initial public offerings on the London Stock Exchange last year – eight of which came in a fourth quarter flurry.
But LSEG CEO David Schwimmer said it’s not a unique problem.
“We have seen on a global basis, a pretty subdued environment for IPOs, and that’s been in New York, that’s been in Hong Kong,” he told CNBC. “That’s got a lot of attention.”
It’s led to concerns London is losing – or has lost – its mojo. Mining giant Glencore is mulling a move away, following high profile departures from the likes of Flutter Entertainment, Tui and Just Eat Takeaway. In fact, the LSE lost 88 companies last year, whether by delisting or transferring primary listings elsewhere — the highest since 2009.
Schwimmer had a warning for those looking elsewhere.
“When you talk about companies that have gone to New York, it’s not such a pretty picture,” he told CNBC’s “Squawk Box Europe.”
“If you look over the last 10 years, 20 U.K. companies have gone to list in New York and raised over $100 million. Of that 20, four are trading up, something like nine have delisted, and the rest are trading down over 80%. So I think you have to be careful with the narrative of the grass is always greener.”
Euronext CEO Stéphane Boujnah expressed his own concerns for the U.K. capital, telling CNBC’s “Squawk Box Europe” that “London has lost its leadership when it comes to liquidity for shares.”
Strong pipeline
Despite London listing volumes falling to a multi-decade low last year — with proceeds down by almost a fifth compared to 2023 — the LSEG chief is optimistic for this year, saying the pipeline is looking significantly better. And the LSEG chief is optimistic for this year, saying the pipeline is looking significantly better.
“If you look at the capital raising that has taken place on the London Stock Exchange, not necessarily IPOs but follow-ons, that market is doing very, very well and there’s more capital raised on the London Stock Exchange than the next three European exchanges combined,” Schwimmer said.
Goldman Sachs also shares a bullish view on the U.K.’s IPO landscape. Richard Cormack, head of equity capital markets for EMEA at Goldman Sachs, said in February that he expected IPO activity would pick up in 2025 as political uncertainty following last year’s election subsides.
While some U.K. and European companies may still be attracted to the U.S., Cormack argued it is unlikely that we’ll see a flood of U.K. or European non-tech, non-biopharma companies list outside of their home market.
Hong Kong comeback?
The idea that the U.S. is a go-to destination for cross-border listings has also been challenged by a new competitor on the scene: Hong Kong.
The city, which is preparing for a $20 billion listings revival this year according to the Financial Times, is poised to capitalize on increasing trade tensions between the U.S. and China.
Shares in China’s largest bubble tea chain, Mixue, surged more than 40% on their Hong Kong debut earlier this month. The Hong Kong listing was 5,200 times oversubscribed, while the international offering was more than 35 times oversubscribed.
Bonnie Chan, CEO of Hong Kong Exchanges and Clearing, told CNBC’s “Squawk Box Asia,” she’s seen a surge in demand from global investors.
“We are seeing much stronger interest from the United States, as well as Europe and the rest of the world,” she said. “There is certainly appetite for investors to pick up these mega IPOs.”
