Britain’s stock market has seen a drop in global rankings, tumbling to 20th place worldwide, according to Bloomberg,
London has been overtaken by significantly smaller venues including Oman, whose entire stock market is just one per cent the size of Britain’s.
Companies floating in London raised $1billion (£790million) this year, down by nine per cent. It pushed Britain down by four spots in the worldwide league table for fundraising from initial public offerings (IPOs) this year.
It is now behind Malaysia and Luxembourg in the global rankings for IPOs, marking a big difference from its regular top-five placement in previous years.
The gap between London and leading markets is stark, with the US maintaining its top position after raising $40.9billion (£32million) through IPOs.
The City failed to secure any listings among the top 100 globally, falling behind markets like Greece, Sweden and South Africa.
The UK has failed to secure any listings among the top 100 globally
GETTY
Even regional competitors have surpassed London, with the UAE raising $6.2billion (£4.9billion) and Saudi Arabia securing $3.4billion (£2.7billion) in new listings.
Britain now trails behind Australia, Poland, and emerging markets that were previously far less significant in global fundraising. The market’s struggles are amplified by low valuations and growing competition from other financial centres.
George Chan, EY’s Shanghai-based global IPO leader, warned: “Governments are doing everything they could to attract more companies to come, so the competition is now more intense.
“If we do not change this sort of landscape, it’s going to take a lot of time for the UK to be back on the top of the pyramid.”
Chris Laing, HSBC Holdings Plc’s head of equity capital markets for Central and Eastern Europe, the Middle East and North Africa, noted: “London, like other European markets, faces increased competition from domestic markets in a way it did not 8-10 years ago.”
Just a dozen firms have listed in London this year, with the largest raising only £150million.
The market’s struggles have drawn criticism from major players, with Revolut’s Nikolay Storonsky stating it was “not rational” to float in London.
Britain’s most valuable fintech start-up leader pointed to stamp duty taxes as a key deterrent, claiming the UK “can’t compete” with America.
Liad Meidar of Gatemore Capital Management offered a stark assessment: “There’s a malaise in the UK – the state of capital markets is negative.”
The exodus from London’s stock market has reached a critical point, with 45 companies departing through mergers and acquisitions this year – the highest number since 2010.
Private equity firms are capitalising on the low valuations of mid-cap companies, many of which suffer from limited analyst coverage.
KKR & Co has been particularly active, completing two buyouts including Smart Metering Systems for £1.3billion and IQGeo for £333million.
Other major players like EQT AB, Brookfield Asset Management, CVC Capital Partners and Fortress Investment Group are also taking UK companies private.
UK authorities are attempting to revive the market through the biggest overhaul of listing rules in more than three decades.
The changes make it easier for companies to have two classes of stock, aiming to attract more tech listings.
A London Stock Exchange Group spokesperson remained optimistic, stating: “We are encouraged by the pipeline of companies looking to IPO and anticipate more activity following the implementation of the new listing rules.”
Alexandra Jackson, a fund manager at Rathbones Group, noted that limited fund inflows are making IPOs harder to execute.
“We need to see some animal spirits come back into the UK,” she concluded, whilst suggesting investors would back the right businesses.
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