London vs New York: Who will win the fintech IPO war?
A battle with New York awaits as Rachel Reeves sets her eyes on London fintech IPOs.
The Chancellor has courted top fintech darlings in her attempt to boost listings on the London Stock Exchange (LSE) as a fleet of firms are flirting with floating in the near future.
Monzo is reportedly consulting with investment bankers on a blockbuster £6bn listing, whilst Starling last year began recruiting for a role that will help “execute a successful IPO or other successful capital event.”
After an 88-firm exodus in 2024—its biggest since the financial crisis—the London Stock Exchange is desperate for a boost.
Fintech could be the embattled market’s saving grace – if it can beat its trans-Atlantic rival.
US markets’ reputation is fading
President Donald Trump unleashed chaos on global markets in April after announcing sweeping tariffs on the US’s trading partners.
The US Nasdaq Exchange – which hosts tech giants Apple, Tesla and Microsoft – suffered some of the biggest losses, sinking to a low of 4,982.77 points. This was down from a year-to-date high of 6,144.15 in February.
The US downturns shifted attention to the Square Mile’s markets, giving it a chance to capitalise on the Big Apple’s decline.
Julian Morse, co-chief executive of investment bank Cavendish, told CityAM: “The perception of the US as the “public markets mecca” is fading, along with broader notions of US exceptionalism.”
Morse added that the UK was “actively addressing” issues hurting productivity and “anticipated pension reforms” could lead to more money being invested in UK stocks, boosting the stock market in the future.
But fintechs may need to see bigger moves from the UK before changing their plans.
Buy now, pay later veteran Klarna, which reported a doubling in losses for the first quarter, had made plans to list in New York.
The plans, now delayed after market volatility, dealt a blow to London, which had hoped for a listing after the fintech established a British holding company last year.
New York has the capital and the brand power
The global fintech industry attracted $95.6bn (£71.3bn) in investment in 2024, according to KPMG’s Pulse of Fintech report.
Total investment in the UK’s fintech communities topped $9.9bn, beating France, Germany, China, India and Brazil combined.
But this was a 27 per cent drop from the $13.6bn in 2023.
Meanwhile, the US raked in $50.7bn across 1,836 deals, emphasising that while the UK dominates Europe, New York’s vast capital threatens to snap up its unicorns and other international names looking to float.
Already, industry veterans have made their intentions of a New York listing evident.
Nik Storonsky blasted a London-listing as “not rational” when compared to the liquidity and loosened regulations in the US.
Jack Zhang, global chief executive and co-founder of Airwallex, told CityAM the “broader bench of institutional investors with fintech expertise” and “brand power” had helped the US draw companies away from the LSE.
Airwallex – the Australian-born payments platform – is hotly tipped to float in the future after smashing a $6.2bn valuation following a $300m fundraise earlier this month.
But the fintech’s chief has made clear London is not in their sights.
“Volatility in the US in recent months does not change the overall competitive positioning of the US stock market,” Zhang said.
He said the UK’s efforts to “simplify listing rules and reduce regulatory burdens” had improved its position as a competitor to the US, but progress was still required.
“The LSE is likely to create more tailored offerings to attract companies from high-growth sectors like fintech, which, for the UK as a financial leader, includes fostering and retaining home-grown companies and attracting fintechs from high-growth markets,” Zhang said.
London must rethink IPOs
London has hosted several fintech IPOs since 2010, including Wise, valued at £8.75bn in 2021, Funding Circle, valued at £1.5bn in 2018, and Lendinvest, valued at £50m in 2017.
But more recent listings have proved problematic. The 2023 IPO of London fintech CAB Payments, which saw the stock tank after its flotation, was described by Bloomberg as the “worst IPO of the year”.
Matt Cooper, the boss of Europe’s biggest equity crowdfunding platform Crowdcube, said: “London’s ability to compete with New York in the fintech IPO landscape will depend largely on how we continue to rethink what ‘going public’ really means.”
As reported by CityAM, the Financial Conduct Authority has initiated plans to “put the P back in IPO”.
This comes as the watchdog kickstarts plans to widen access to equity and bond markets for retail investors.
The City regulator will introduce a Public Offer Platform (POP) in 2026. This platform aims to facilitate companies’ raising capital by offering securities directly to the public, including retail investors, without the need for a full public listing.
Cooper said this was a “positive move” in attracting fintech firms and “opens the door” for businesses to raise capital outside traditional methods.
The UK boasts a thriving fintech hub and is the top unicorn breeder in Europe, with over 185 start-ups valued at over £1bn.
James Baston-Pitt, Alloy’s head of growth for UK, EMEA and APAC, told CityAM: “The London fintech scene needs to keep doing what it does best. If it does, then when the IPO market does bounce back, London will be primed to benefit.”
He said London’s “open and constructive dialogue between fintechs, regulators and government policy makers,” favoured it in comparison to the US.
The Chancellor called in Innovate Finance’s Unicorn Council for UK Fintech for growth talks in March.
Fintech giants were told to come to the meeting “armed with ideas about how to improve UK competitiveness,” as reported by Sky News.
“This proximity is part of UK fintech’s enduring appeal and why the UK is home to many of Europe’s biggest, most exciting and most successful fintech success stories,” Baston-Pitt said.
Could Pisces be a stepping stone to a London IPO?
The government hopes the launch of a new type of private market for unlisted securities, known as Pisces, could provide a stepping stone to help grow innovative startups that are not yet ready for the public markets.
The framework, known as the Private Intermittent Securities and Capital Exchange System, will create a new FCA-regulated private stock market, with looser regulatory burdens.
The City regulator said it would provide “opportunities to buy stakes in growing companies” and allow private firms to “tap into a broader range of investors and asset managers”.
For fintechs, this could mean improved access to liquidity without the pressure of a full public listing, enabling them to raise capital and offer shareholder exits in a controlled, regulated environment.
Then, once it has maintained the capital structure needed for a float, a London listing may be a logical next step.
Bridging the Atlantic
While the battle for listings is bound to heat up, Morse said there is a benefit to being in partnership.
“Rather than focusing on US v UK, there is an opportunity for collaboration between different markets in dual listings – either formally or informally – helping developing markets deepen their own capital markets or companies from more established markets broaden their investor base,” the investment banking boss said.
But after Reeves promised UK fintech the world in her speech at Innovate Finance’s 11th Global Summit, the industry now will be expecting her to deliver.
She pledged to make the UK “one of the best places in the world for fintechs to start-up, scale-up and to list”.
Only time will tell if she’ll help London topple New York to get there.