Auto Trader: FTSE 100 CEO on how to fix the London Stock Exchange
The government needs to encourage more investment into companies listed on the London Stock Exchange to revive the fortunes of the City, according to the CEO of FTSE 100 giant, Auto Trader.
Nathan Coe, speaking on an upcoming episode of City PM’s Boardroom Uncovered podcast, said the UK doesn’t have the same level of “encouragement or incentivisation” around building tech businesses.
The Australian, who has led the Manchester-headquartered group since February 2020, added that it “feels a bit lonely” as one of the largest technology companies in the UK and that’s a stark difference between this country and the US.
Speaking on the episode, Coe called on the government to “spur on” areas such as building technology companies and AI “where we can be the best in the world and it will attract a lot of investment”.
The boss of Auto Trader added that more needs to be done to encourage pension funds to invest in equities in the UK.
Coe’s comments come after City PM reported in February that the owner of the London Stock Exchange had dismissed the gloom that is plaguing London’s public markets, pointing to its solid performance relative to European counterparts.
Speaking alongside his firm’s full-year results, David Schwimmer, the veteran boss of the London Stock Exchange Group (LSEG), reiterated his view that UK IPOs would pick up this year, saying he was “very confident in the direction of travel”.
The boss was also asked about the London Stock Exchange’s ability to retain some of its blue chip firms, amid a growing pattern of companies being picked off public markets by private equity or opting to move their primary listing to the US.
But Schwimmer played down the extent and gravity of the exodus to the US, pointing that just two listed UK-listed companies a year in the past 10 years had opted to move listings to US exchanges.
Auto Trader boss: ‘It feels a bit lonely at the top’
Speaking during the Boardroom Uncovered episode, Coe said: “There’s a lot of talk around [that] we need stronger UK investors. Our own business has as many investors from the US and as it does in the UK.
“It is a liquid stock market and if people are interested in buying decent companies, and there are decent companies over here, then they will invest.
“We’re one of the largest tech businesses in the UK. It feels a bit lonely.
“I can tell you the names and phone numbers of the people that run the other tech businesses in the UK and that is a big difference between the US and the UK.
“We haven’t really seen the same level of encouragement or incentivisation around building tech, building AI, all the things I would argue this country should be really good at.
“We have a history of inventiveness, engineering – all these things couldn’t be more important than they are.
“The government really needs to spur on some of these areas where we can be the best in the world and it will attract a lot of investment.
The Boardroom Uncovered interview comes after shares in Auto Trader hit an all-time high at the end of September 2024 while its revenue jumped by 14 per cent to more than £570m during its latest financial year.
In January this year, City PM reported that Auto Trader is to relocate its headquarters from a building named after a Manchester legend to a new base worth £87m.
‘Pension funds need more incentives to invest in UK companies’
The boss of Auto Trader added that pension funds need to be encouraged more to invest in UK equities.
He said: “The percentage that they put into UK equities is just very, very small.
“If you take a market like Australia where I was 17 years ago, the amount of pension money that goes into Australian businesses and supports those businesses also supports liquidity, supports valuation.
“And that makes it a more attractive place for other people to invest.
“We don’t really have that domestic or the same level of domestic strength investing in equities that other markets have.
“Unfortunately these things can become virtuous circles if local investors aren’t investing in supporting valuations and supporting those businesses. And it is a bit harder for overseas investors.
“So I think looking at how we encourage UK pensions and institutional investors to put a good chunk of their money towards UK companies that would do a world of good.
“It would help liquidity, it would help support valuation. And it would give a bit more on top of political stability.
“We do have some investors that will say, ‘I love the business, but it’s all just down, it’s all just a bit uncertain’.
“I mean, at least we’ve got a stable government, I guess at the moment. We went through a period where I was the new Prime Minister every year.
“For them, that is a risk that might well impact Auto Trader and that I need to take that risk somewhere else.
“It doesn’t stop investors investing in a good company, but more good companies and a bit more UK investment going towards UK companies would go a long, long way.”