Exclusive: City grandees look to Asia in bid to solve IPO drought
City grandees are looking to capitalise on European political volatility and tempt a wave of international and Asian companies onto the London Stock Exchange next year, according to a memo seen by City PM.
London’s public markets have “tailwinds” behind them and the capital could benefit from being the “adult in the corner of the room” amid political turmoil in the US and Europe, a note shared among members of the Capital Markets Industry Taskforce, the group of senior City figures led by London Stock Exchange chief, Julia Hoggett, suggests.
“The positive narrative is working on the ground with both issuers and investors when you talk to them about listing venue – the pipeline is large and growing,” Mark Austin, the capital markets lawyer and CMIT member, wrote in the note, obtained by City PM. “The capital cycle is coming and although IPOs are not going to come in the very near future, they are coming, and in numbers, in ’25 and ’26 onwards.“
Austin added that the UK will benefit from relative “political stability for at least the next five years” compared to European markets, pointing to the election of right-wing leaders in the Netherlands and Italy and a populist surge in France, Germany and Austria.
CMIT, which also includes Phoenix chief executive, Sir Nicholas Lyons, and GSK chair, Sir Jonathan Symonds, has banged the drum for public markets reform in the capital over the past two years.
The group has lobbied the government to ease pension rules and encourage more domestic capital into the market, as well as pushing for a more slimmed down rulebook for companies listed on the London Stock Exchange.
In July, the Financial Conduct Authority overhauled its listing regulation in what the watchdog called the biggest shake-up in three decades. The Cambridge chipmaker, Arm, had blamed the rules in part for its decision to snub London in favour of New York last year.
The note marks a rallying cry for the health of the Square Mile after an IPO drought over the past two years. The London Stock Exchange looks on course to register its lowest levels of floats on record this year, with just 14 debuts across its two markets.
In the note, Austin wrote that regulatory changes had now put the UK on an equal footing and could open the door to a wave of Asian companies listing in the capital.
“You see companies starting to come out of Asia – see CK Infrastructure adding a secondary listing in London in mid-August, two weeks after the [listing] rule changes came in,” he added.
“They won’t go to the US for obvious reasons and they don’t want sole exposure in HK any longer.”
CK Infrastructure opted for a secondary listing of its shares in the UK to broaden its international investor base beyond Hong Kong.
The comments point to tensions between China and the US which have ruled out New York as a potential float destination for some Asian firms.
Fast fashion outfit Shein, which has now filed for a London IPO, had originally planned to list on Nasdaq but was met with fierce resistance from lawmakers in Washington.
Suggestions the City may openly court more companies from China and Hong Kong may unsettle some in Westminster and the City, however. Shein’s plans have been met with backlash over its human rights record and ties to China, where it was founded.
“A company which has failed to make full disclosures about its supply chains as required by UK law, and where there are grave concerns about its factory working conditions has no place in London,” Alicia Kearns, the Conservative former chair of the Foreign Affairs select committee said earlier this year.