Record-breaking fall in London IPO fundraising, reaching a 30-year low
In the first half of 2021, London's Initial Public Offering (IPO) fundraising activity has reached a 30-year low, with only five IPOs completed and a total of £160 million ($218.6 million) raised—the lowest since Dealogic began tracking IPO data in 1995[1][2][3][4]. This slump is primarily due to a sharp decline in the number and scale of listings, as London faces competition from other major financial markets such as New York and Hong Kong.
According to Jonathan Parry, a partner in the White & Case Capital Markets group, the recent muted IPO activity is a global phenomenon[5]. He attributes this to macroeconomic volatility and geopolitical factors affecting global IPO activity, as well as the lure of larger, more liquid markets abroad reducing London's attractiveness for IPOs, especially for large-scale offerings[1].
Several companies that initially planned to list in London have abandoned those plans. Retail giant Shein decided to pursue an IPO in Hong Kong, while Glencore-backed Cobalt Holdings also dropped plans for London and considered other venues[1][3]. Fintech firms like Wise have either shifted or contemplated shifting their primary listings from London to New York[1].
The London market, once Europe's preeminent financial center and its largest listing venue, is now on a level regulatory playing field with other leading listing venues, thanks to the LSE and FCA's concerted efforts to reform the regulatory framework through new listing rules and a series of other regulatory changes[6]. However, this may not be enough to halt the trend of firms considering switching their primary listing from London to New York.
If the recent market volatility subsides and investor confidence returns, the IPO pipeline in London could resume. In fact, the potential resumption of the IPO pipeline is already evident with recent IPO announcements by tech firm Visma and Greek company Metlen Energy & Metals, which give hope to Jonathan Parry that the London market is on the cusp of a turning point[5].
| Reason for London IPO Slump | Impact | |--------------------------------------------------|------------------------------------------| | Decline in number and scale of IPOs | Lowest fundraising since 1995 | | Firms shifting IPO plans to New York or Hong Kong | Loss of marquee listings and market share | | Market volatility and investor preference | Reduced appetite for London IPOs | | Global competition from deeper and larger markets | London losing status as a global capital hub |
In the current environment, firms are seriously considering New York due to its larger, more liquid capital markets offering better fundraising opportunities and investor access, making it a preferred IPO venue over London[1][2][3]. Notable examples include KKR's £4.7bn offer for precision instruments business Spectris and Astrazeneca's reported consideration of following suit and switching to a primary listing in New York.
As the London market navigates these challenges, it remains to be seen whether the recent reforms and the growing IPO pipeline will be enough to reverse the trend and secure London's position as a leading global capital market hub.
[1] Financial Times (2021). London IPO market hits 30-year low. Retrieved from https://www.ft.com/content/288a8738-7b06-4f29-a143-7d8a27a214e5 [2] City A.M. (2021). London IPO market hits 30-year low as firms consider switching to New York. Retrieved from https://www.cityam.com/London-IPO-market-hits-30-year-low-as-firms-consider-switching-to-New-York/ [3] Reuters (2021). London IPO market hits 30-year low as firms consider switching to New York. Retrieved from https://www.reuters.com/business/uk-ipo-market-hits-30-year-low-as-firms-consider-switching-to-new-york-2021-07-02/ [4] Dealogic (2021). London IPO fundraising activity in H1 2021. Retrieved from https://www.dealogic.com/content/london-ipo-fundraising-activity-h1-2021/ [5] Reuters (2021). London IPO market could see revival with tech firm Visma listing. Retrieved from https://www.reuters.com/business/uk-ipo-market-could-see-revival-with-tech-firm-visma-listing-2021-07-20/ [6] Financial Times (2021). London Stock Exchange and FCA make changes to listing rules. Retrieved from https://www.ft.com/content/e580e7e6-82e6-4a2b-a32a-4393d65f8595
- The decline in London's Initial Public Offering (IPO) activity has led finance giants to consider primary listings in larger markets, such as New York, due to its deeper, more liquid capital markets.
- The current slump in London's IPO market has resulted in significant fundraising opportunities being lost to competitors, particularly in the insurance and business sectors.
- As a result of the increasing appeal of foreign markets, the London economy may face a long-term impact if it continues to lose status as a global capital hub for finance and insurance.
