How do London equity markets get their mojo back?

Hefty fees, lots of transparency and much more management hours – the idea of taking your company public sounds gruelling. But the deal used to be that if you can deliver on all of this and keep Mr Market happy, you and your shareholders would be rewarded, sometimes substantially. 

Thanks to high-interest rates and at least a couple of wars, companies have been attracted to other options. Namely, private equity. The deal here is different. You can sell a substantial stake in your business, but you may not have to commit to more public transparency or management hours.    

There’s still a cost: your new shareholders probably want a good return on their investment. That means improving the business’ balance sheet, which is often easier said than done. To outline these options is to point out the obvious to anyone who has even worked near the city. But it might be a necessary exercise, even for the most senior capital markets operatives. That’s because London equity markets are going through a reset. A tough 2023 ended with a dismal Q4 in which there were no IPOs on either the UK’s main market or Alternative Investment Market. Thankfully, the first half of 2024 has provided some positivity with eight new IPOs.

The Aquis Stock Exchange has also reported “pent up demand” for IPOs this year, following 16 IPOs last year. But the existential question remains: why list and why list in London? Some groups have called for further liberalisations of listing rules. Granted, these will likely help matters but will UK equity markets really be able to compete with the likes of NASDAQ on these grounds? Equally, and sticking with NASDAQ comparison, what does London want to be known for? The US now seems to have an unassailable lead on large and mega-cap technology stocks. With a laser-focus, should London concentrate on servicing the smaller-cap growth company portion of the market?

What industries should the equity markets of the UK major on? As a starter for ten and given the country’s world-leading status in these areas, fintech and professional services seem like a no brainer. If London really wants to get its mojo back, it needs to think about these questions, pick its winners and start telling business leaders across the world why they should be listing here. Business as usual won’t be enough. Flagging ‘headwinds’ won’t be enough. Shaping some truly unique selling points will just be the start.