If Burnham wants growth he’ll have to save the City
Quite the roll call: Beazley, Tate & Lyle, Intertek, Schroders, easyjet. Companies abandon their public listing for their own reasons but the cumulative impact cannot be ignored and, given the dearth of any substantial new entrants, it cannot be dismissed as the healthy churn of dynamic capital markets. Far from it. A typically punchy note from Peel Hunt last week set out the scale of the problems facing the City.
According to Charles Hall, since the start of 2023 there have been 154 bids for UK companies worth more than £100 million with a combined value of £165 billion. Meanwhile, over the same period, there have been just 11 IPOs of that size, worth a rather meagre £6 billion. Some firms succumb to private equity, some are hoovered up through sector consolidation and others – such as Flutter and Wise – leave London for the bright lights of New York. As Hall notes, in the last three and a half years “the UK has seen seven large companies move their listing, taking [circa] £120bn of market cap with them.” He goes on: “There have also been eight UK-based companies choosing to IPO overseas with a market cap of £330bn.”
London’s ‘epic self harm’
Over that time, every Chancellor and City Minister has vowed to make the UK “the best place to scale and list a business” – but words (a bit like London listed firms) are cheap. City players are banging the drum for more meaningful reform including the abolition of stamp duty on shares, changes to capital gains tax to encourage domestic investment and a more muscular approach towards incentivising pension fund investment in UK equities.
Shadow business secretary Andrew Griffith, who was once the youngest CFO of a FTSE 100 company, yesterday hit out at “ivory tower financial regulators” and the “epic self harm” of left-wing ESG rules taking the shine off the London market. He’s not wrong.
More voices join the debate today thanks to top City law firm Addleshaw Goddard, whose new report on the future of London includes a rallying cry for politicians “to incentivise domestic investment, create an attractive fiscal environment for entrepreneurs, and make it easier for the world’s best minds to come to the UK.” These are vital ambitions, but they didn’t feature in Andy Burnham’s “growth in every postcode” speech.
Let’s give the last word to Charles Hall, and hope Burnham pays attention: “We are currently on track to see more UK companies listing in the US this year than in the UK [and] that should be a stat that makes everyone think carefully.”