The London Stock Exchange (LSE) is experiencing what’s kindly being called a drought when it comes to IPOs.
With the year about to close, it will likely register its lowest number of IPOs this year. Only 14 companies have made their debut so far.
And that’s bad news for the whole square mile, as an IPO represents lucrative fees for all those who drink at the water hole.
But do the City grandees have a solution and will Asia step in to take the slack?
Financial media stalwart City AM has seen a memo and the bet is, with European and US political volatility, the UK, with its moderate labour-light stance which hopefully has five steady years ahead of it, will be appealing.
London´s public markets, goes the argument, will be viewed as the adult in the corner of the room.
Mark Austin, the capital markets lawyer and CMIT member, used the memo to say: “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. 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.“
The LSE has been active in trying to reposition itself as a less top heavy institution with a thick rule book, one of the reasons why a number of high profile IPOs snubbed the UK and went stateside, Cambridge chipmaker Arm amongst them.
With a toned-down attitude, and attempts to attract new money from pensions and other domestic sources underway, the LSE is now ready to open its arms even further to welcome newcomers from Asia and beyond.
Another optimistic addition to the LSE sales power point presentation is the believed-to-be worsening tensions between China and the US which rules out trips to Wall Street for many Chinese and Hong Kong companies.
Quite how the British government will view this possible wooing of Chinese and Hong Kong companies remains to be seen, especially with human rights concerns at the fore, but the LSE has to do something to drum up business.
But however good this sounds on paper, London does not have the cache and allure it once did, even if New York could become a little isolated in the short-term. So, it remains to be seen whether the LSE can tempt big global companies, or whether a new market will start to emerge onto the scene.