Major market executives have not lost faith London’s ability to attract major share listings for large international companies according to new top-level research out today.
Big-four accountancy firm KPMG spoke to a range of senior figures from large European and US banks, as well as small and medium-sized brokers, to take the temperature of the industry’s attitude to the City. The survey came after a tepid showing for flotations and merger activity in London last year, when headlines about companies leaving the Square Mile for New York dominated sentiment.
But in results out today, KPMG found the majority of the heavy-hitters it spoke to “still see London as a destination of choice when considering listing” their shares.
The City was backed by 86% of respondents, in second place to New York with 94%. But it was clearly ahead of its nearest European rival, Amsterdam, which scored 50%.
Aadam Brown, head of independent equity capital markets advisory at KPMG UK, said: “London has not lost its lustre,” adding:
“When it comes to where to list, it boils down to identifying the natural footprint or home of the company - usually determined by factors such as the location of a company’s headquarters and its largest sales region. For those exploring foreign listing venues beyond their home country, there needs to be a strong rationale.”
Only £754 million was raised by London’s major initial public offering (IPO) market in 2023, from just eight deals.
Hopes that it will bounce back to more usual levels were also identified, by an overwhelming majority of the people covered in the survey. But they might take a little longer to kick in than some may have anticipated. KPMG’s survey found that 91% of the executives covered “expect the UK IPO market to return to normal activity levels in 2025”. Two thirds expect IPOs in the wider Europe, Middle East and Africa region this year to be led by the Middle East and Germany.
The global accountancy firm spoke to 32 senior people in the capital markets, including a Goldman Sachs, Citi, Morgan Stanley and HSBC.
Brown said: “While eaders were slightly more conservative on predicting a return to normalised UK IPO market conditions in this year’s survey, it does feel like we are heading to an inflection point. Better market sentiment and investor appetite will begin to shine through."
Any rebound will ease fears in the City of job losses relating to the dearth of deals. A run of bleak updates this month from recruitment agencies has added to the unease from 2023. Any signs of the recovery kicking in this year before gathering pace in 2025 will help lift the gloom.
“It only takes a few successful IPOs of high-quality companies to turn markets around, and there is every reason to believe this inflection point will occur in 2024,” said Brown.
