London Stock Exchange Group boss: IPOs will return (when the world calms down)
London’s sluggish IPO market will bounce back as a rapid rate hiking cycle begins to slow and global jitters over inflation and political instability settle, the boss of the London Stock Exchange Group (LSEG) has said.
New flotations have fallen off a cliff this year as firms shelve plans to shift on the public markets amid turmoil shaking the markets.
The amount of cash raised via IPOs fell by 36 per cent in the third quarter of the year as eight issuers raised just £565.5m.
Over the first three quarters of 2023, 23 companies listed in the UK, raising £953m, compared with 34 IPOs raising £1.16bn in an already subdued 2022.
However, David Schwimmer, boss of London Stock Exchange owner LSEG, has claimed listings will return once markets settle.
“IPOs will come back, when the environment stabilises and improves,” Schwimmer told Reuters in an interview.
“Markets are very adaptable, if this is the new norm then markets will adjust to that and people will raise capital in that new norm,” he said.
Listings should recover even if the conflicts in Ukraine and Gaza drag on, Schwimmer added, as pent-up demand builds from companies needing capital to develop their businesses.
Regulators in London have ushered in a wave of reforms this year to try and boost the appeal of the market, including merging the standard and premium segments of the main market and laying out plans to strip back prospectus regime.
Ministers are also looking to unlock a wave of capital from pension funds and allow them to invest more in both the private and public markets.
“The reforms that the FCA is putting through, they’re moving relatively quickly, but the markets move quickly too,” Schwimmer said. “I would love to see these kinds of changes be put through as quickly as possible, but these processes take time.”
The drop-off in listings this year has fuelled debate around the status of London as an international hub.
Britain’s departure from the European Union has led to Amsterdam overtaking London as Europe’s top share trading centre.
London’s IPO market also faces more competition from the EU in international listings while rivalry with New York remains intense.
Additional reporting by Reuters