Where have all the London IPOs gone?

LONDON - The London Stock Exchange has lost its mojo. The more than 300-year-old bourse is shrinking as companies opt to go public elsewhere, shift their existing listings to the US, and accept deals to be taken private.

London has been suffering from a multiyear drought in initial public offerings (IPOs). Britain used to be among the top five venues for IPOs by fund-raising volume, but in 2025 fell out of the top 20 as the total capital raised across the first three quarters was the weakest showing in more than 35 years. The country now lies in 23rd spot in the global ranking, behind unlikely rivals such as Mexico and Oman.

While Brexit has played a role in investors shying away from London, the malaise has been decades in the making. A deeper productivity crisis pushed Britain’s economic performance into the slow lane in relation to other Group of Seven developed nations, and regulatory changes prompted a slow exodus of domestic capital from British equities.

What’s gone wrong?

London’s reputation as a listing destination for international companies has suffered as several firms – including building materials provider CRH and online betting group Flutter Entertainment – chose to switch their main share listings to New York.

More defections look to be on the way. The shareholders of fintech company Wise approved a proposal to shift its primary listing to the US. It is one of more than US$100 billion (S$130 billion) worth of London-listed firms that have announced or executed plans to move to New York in recent years, Bloomberg calculations show.

Drugmaker AstraZeneca, the most valuable company in the FTSE 100, announced in September that it will replace its American Depositary Receipts (ADRs) with a direct listing on the New York Stock Exchange. This will put Astra’s US listing on a more equal footing with London, although that’s a better outcome than previous speculation the firm would retreat from the British exchange entirely.

London has missed out on some key new listings, too. E-commerce giant Shein abandoned plans to float in the city after it was unable to secure approval from Chinese regulators. It has instead shifted its IPO preparations to Hong Kong, Bloomberg reported.

That may take less of a toll on the British psyche than the loss of home-grown technology gem Arm Holdings, whose semiconductor designs underpin almost every mobile phone on the planet. Arm was listed in London before being taken private by Japan’s SoftBank Group in 2016. Despite lobbying by British government ministers and an offer to relax listing rules, SoftBank chose to relist Arm in New York, and it joined the Nasdaq in 2023.

How bad is London’s IPO slump?

From January through September, companies listing in London raised just US$248 million, according to data compiled by Bloomberg, a 69 per cent drop from a year earlier. IPO fund raising in the US over that same period amounted to nearly US$54 billion. The last time London was able to come close to those kinds of levels was around two decades ago.

As London languishes, rival European exchanges have been stepping in to capture the bigger listing opportunities. That includes defence manufacturer Czechoslovak Group, which is leaning toward Amsterdam for its public debut and could fetch a valuation upward of €30 billion (S$45 billion). Stockholm, meanwhile, is Europe’s most active exchange for IPOs in 2025, hosting the more than €3 billion listing of private equity-backed home alarm specialist Verisure.

It is not all doom and gloom for London as its IPO activity looks poised for an uptick. LED mask maker The Beauty Tech Group began trading in early October, and canned food producer Princes Group and specialist lender Shawbrook Group have announced plans to go public. Software giant Visma has provisionally picked London for a 2026 float that could rank as the market’s biggest IPO in years.

What’s the allure of listing in New York?

Britain has long struggled to compete with the US market, which is far bigger, more liquid and has a deeper pool of investors.

Even though the FTSE 100 was at a record high in October, its gains have trailed the S&P 500 since the Covid-19 pandemic. That’s partly a function of the US index showcasing high-growth companies, in particular technology stocks such as Apple and Nvidia. London, by contrast, remains predominantly rooted in old-economy sectors, with banks including HSBC Holdings and energy firms such as Shell among the largest companies on the exchange.

Listing in the US brings the opportunity of securing a higher valuation and raising more capital. Stocks in the FTSE 100 were trading at a multiple of 13 times their forward 12-month earnings as of Oct 23, versus 22 for the S&P 500. That differential can also act as an incentive for management to shift focus stateside, as executive remuneration packages are often connected to a company’s share price.

More British firms may be tempted to turn to the US as investor interest increases - trading in their ADRs has soared in recent years. Volumes for the 20 FTSE 100 companies with listed ADRs rose more than 80 per cent between 2019 and 2024, data compiled by Bloomberg shows. The gains are set to continue, as volumes so far in 2025 have already topped the 17 billion ADRs that changed hands in 2024.

What role is private equity playing in London’s woes?

London’s appeal as a hub for IPO activity has also been weakened by an abundance of alternative funding from private equity. More firms are choosing to remain unlisted and finance their growth through private capital, staving off the scrutiny and pressure that comes from public-market investors.

Private equity is also taking advantage of the discounted valuations of London-listed companies. Compared with a couple of decades ago, firms listed in Britain are about 35 per cent cheaper than peers in other developed countries.

Scores of businesses have or are being taken private, including cyber-security specialist Darktrace and precision instrument maker Spectris. The volume of merger and takeover activity means companies are vanishing faster from London’s stock exchange than they are being replaced.

What can the UK do to revive the London stock market?

The London Stock Exchange, Financial Conduct Authority (FCA) and British government have been trying to resuscitate the country’s moribund capital markets. British Prime Minister Keir Starmer has pledged to review regulation that’s “needlessly holding back” investment.

In 2024, the FCA revamped its listing rules to facilitate dual-class share structures and allow companies to make more decisions without putting them to a shareholder vote. In the US, founders retaining control in this manner in tech firms is considered normal. Alphabet’s Larry Page and Sergey Brin and Meta Platforms’ Mark Zuckerberg all have the majority of voting rights.

However, while the British reforms have made for a more accommodating landscape for dual-share structures, companies with different voting rights still face more stringent criteria to be eligible for inclusion in major indexes administered by FTSE Russell.

One of the factors weighing on investment in British equities is a 0.5 per cent tax on trades above £1,000 (S$1,730), which is the highest of any major market. There is no such stamp duty on share transactions in the US. The British government is considering a plan to exempt the shares of newly listed companies for two to three years as part of the November budget.

Another problem is the flight of domestic capital from London’s stock market. Insurers and pension funds have rotated away from British equities in recent decades. In the early 2000s, new rules were introduced that forced retirement fund managers to be more open about their investments and how they planned to meet future pension obligations. One result was a shift out of riskier equities – the pension industry’s preferred investment until that point – and into safer government bonds.

The trend was reinforced over the following decade as millions of workers holding so-called defined-benefit pension plans retired. Pension managers doubled down on government debt at the expense of shares so that they could better match their long-term liabilities to those retirees. By 2022, the combined share of British equities held by insurance and pension funds had dropped to just 4.2 per cent, from 45.7 per cent in 1997. BLOOMBERG