The London stock market is facing a critical challenge as takeover bids surge and new listings dwindle, making it a top priority for the next chancellor to address. Recent data reveals a staggering imbalance: £285bn has exited via takeovers and relocations since 2023, while only £6bn entered through new listings. This trend threatens the UK's financial hub status and demands urgent action.
The Scale of the Problem: Takeover Bids and Capital Flight
In a single day, three UK-listed companies—Rotork, Gooch & Housego, and Ramsdens—received takeover bids totaling over £4.6bn. These deals highlight a broader pattern: since 2023, 154 bids for UK firms worth over £100m have removed £165bn in market capitalisation. Additionally, seven major companies shifted their primary listings abroad, mostly to the US, draining another £120bn.
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Why Are UK Companies Leaving?
Factors include lower valuations, regulatory burdens, and a preference for US markets with deeper liquidity and higher growth premiums. The Peel Hunt report, titled "Selling the Family Silver", underscores this lopsided trend, warning that the London Stock Exchange risks becoming irrelevant for high-growth sectors.
| Metric | Value |
|---|---|
| Takeover bids (since 2023) | 154 |
| Capital lost via takeovers | £165bn |
| Capital lost via relocations | £120bn |
| New listings (over £100m) | 11 |
| Capital gained via new listings | £6bn |
Policy Responses: What Has Been Done?
Policymakers have introduced changes, such as allowing founders to retain outsized voting rights, similar to US tech companies. However, these minor adjustments have failed to reverse the trend. The next chancellor must implement bolder reforms to restore confidence.
Key Takeaways for Investors and Policymakers
- Urgent need to simplify listing rules for high-growth firms.
- Incentivize institutional investors to back UK IPOs.
- Address valuation gaps through tax reforms and market promotion.
- Enhance regulatory competitiveness vs. US and EU exchanges.
What the Next Chancellor Should Prioritize
To boost the London stock market, the chancellor should focus on reducing red tape, offering tax breaks for long-term investors, and creating a dedicated taskforce to attract tech listings. Collaboration with the Financial Conduct Authority is essential to streamline approval processes.
FAQ
Why is the London stock market shrinking?
The London stock market is shrinking due to a surge in takeover bids and companies relisting abroad, particularly in the US, where valuations and liquidity are higher.
What can the next chancellor do to boost listings?
The next chancellor can simplify listing rules, offer tax incentives for IPOs, and promote London as a global financial hub to attract new companies.
How many UK companies have been taken over since 2023?
Since 2023, there have been 154 takeover bids for UK companies valued over £100m, removing £165bn in market capitalisation.
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