London’s IPO drought deepens but could Trump’s tariffs shake things up?
The London Stock Exchange has struggled to entice companies looking to go public — but some market watchers say a tariffs-driven diversification away from the U.S. could help the U.K. win back a greater share of the IPO market. On Thursday, British fintech giant Wise dealt a fresh blow to the London Stock Exchange by announcing plans to move its primary listing from the U.K. capital to New York. It came soon after metals investor Cobalt Holdings scrapped plans for a London IPO. The firm confirmed to CNBC on Thursday that its U.K. listing would not go ahead, but declined to comment further. Meanwhile, reports emerged last week that Chinese fast fashion giant Shein was now looking to list in Hong Kong instead of London when it floats on the public market. These developments raise fresh questions about London’s appeal to companies looking to raise capital. In recent years, the London Stock Exchange has seen dwindling interest, with just 18 companies floating on the U.K. stock market in 2024, according to EY data — a far cry from the 119 companies that listed in London just three years earlier. More recent figures from professional services giant PwC showed that in the first quarter of this year, proceeds raised from IPOs on the London Stock Exchange fell to £100 million ($135.86 million) from £300 million a year earlier. Companies that have listed in London over the past year include RC Fornax, which joined the FTSE AIM in February, and Canal+ . The French broadcaster saw lackluster demand for its December IPO, with shares falling 22% on its debut in London . London remains the leading European exchange in terms of capital raised and the total market cap of the companies listed, data from the London Stock Exchange shows, however. After London, the top exchanges so far this year are in Switzerland, Milan, Brussels and Frankfurt, by capital raised. Russ Mould, investment director at AJ Bell, pointed out that there is much more appetite to list in the U.S. than Britain, likening the U.K. stock market to “a boxer determined to keep going in a grueling fight” after Wise unveiled its plans to move its preliminary listing. “While the FTSE 100’s share price performance might have beaten the main U.S. indices this year, the broader U.K. stock market continues to take a succession of blows to the head from a reputational perspective,” he said. “Takeovers are coming thick and fast, IPOs remain scarce, and more companies are looking Stateside for their main stock listing in hope of a higher valuation.” The slowing trend in IPOs is being seen across the globe — but on Wall Street, significant capital is still being raised by new listings. Global IPO volumes fell by 10% year-on-year in 2024, according to EY’s data, but the U.S. market raised the most from IPOs at $27.6 billion — taking the top spot for the first time in three years. Year-to-date, Mould pointed out, there had been just eight new floats in London, compared to the 136 IPOs seen so far this year in the United States. “But even those numbers are way down from the all-time high of 1,035 in the USA in the frenzied days of 2021,” he added. “And those dates do carry their own warning … the 2021 frenzy led to a nasty hangover in 2022.” According to LSEG’s data, £27.9 billion has been raised on the New York Stock Exchange so far this year, compared to London’s £7.5 billion. A pivot toward Europe and the U.K.? Chris Clement, senior portfolio manager at BRI Wealth Management, told CNBC that the slowdown in London listings had occurred as companies eyed “significant premiums” on U.S. versus U.K. valuations — but he added that growing diversification away from the U.S. had the potential to change the picture. U.S. President Trump’s controversial trade policies have already pushed some investors to look beyond the USA — and Clement said the same could happen with businesses looking to list. “At a time when investors are starting to question U.S. exceptionalism, we may see this trend slow or even stop as investor focus moves away from the U.S. back to Europe, the U.K. and further afield,” he said in an email on Thursday. A spokesperson for London Stock Exchange Group (LSEG) told CNBC that a buzz appeared to be building around the U.K. exchange. “We have seen a noticeable increase in interest from international companies in coming to London with many starting to prepare,” they said. Mark Williams, global chief revenue officer at M & A platform provider Datasite, agreed that Trump’s policies could “significantly reshape” dealmaking this year and “spark a pivot … to European and U.K. markets.” “The risks to U.S. equities have begun to prompt a reappraisal of diversification, triggering a switch from the U.S. to European and U.K. equities, which could mean greater investment in U.K. companies and even a boost in IPO activity,” he told CNBC in an email. Looking ahead, Mould urged investors to carefully consider new entrants to any index before jumping onto an IPO bandwagon — wherever they list. “Any offering should be treated on its merits and investors should assess a market newcomer as thoroughly as they would assess an existing listing,” he said. “Check out its competitive position, management acumen and financial strength, before ultimately deciding whether the valuation leaves enough upside to more than compensate for any downside risks.”
