This year has seen the London Stock Exchange endure its most challenging stretch for company exits since the financial crash. In total, 88 businesses have either delisted or shifted their primary listings away from London’s central market during this year, with merely 18 new entrants to take their places.
This signifies the largest net departure of firms from the main market since 2009. The new listings are also anticipated to be the fewest in 15 years, with initial public offerings remaining scarce as acquirers set their sights on companies listed in London.
Ashtead, the equipment rental firm boasting a £23 billion market value, recently suggested relocating its primary listing to New York. This would add to the ranks of six other FTSE 100 firms that have relocated their primary listings abroad since 2020. Collectively, these companies had a combined market valuation nearing £280 billion — representing roughly 14 percent of the current total value of the FTSE 100.
Among these companies are the £39 billion gambling behemoth Flutter and the £55 billion construction materials giant CRH. Both have transitioned their main listings to New York in the last 18 months, while a wave of acquisitions by private equity firms has further diminished the exchange.
“If we aspire to be viewed as a global financial leader, we must cultivate a vibrant equity capital market,” stated Charles Hall, head of research at stockbroker Peel Hunt. “The UK market doesn’t have an inherent entitlement to be a prominent listing hub, yet it needs to be nurtured and supported to thrive in an increasingly global marketplace,” he continued. He cautioned that absent decisive action, additional companies would exit.
Businesses relocating their primary listings to New York have pointed to a larger investor pool and improved liquidity prospects. In some cases, the transition highlights the expansion of their operations in North America, where Ashtead generates 98 percent of its operating profit.
Significant outflow of London listings
Ferguson, a plumbing company that relocated in 2022, reports deriving 99 percent of its revenue from the US. Bank of America indicates that nine firms within the FTSE 100 earn more than half of their revenues from the American market.
This includes data firm Experian and education provider Pearson. A study from last year identified London as the primary European exchange most susceptible to losing companies to the US. The analysis evaluated firms based on their valuation discrepancies compared to US counterparts, revenue shares produced in the US, and the ratio of North American investors in their shareholder base.
Among the 18 large groups listed in London deemed at risk of flight were Rio Tinto and British American Tobacco. Investors have urged both entities to shift their main listings to Australia and the United States, respectively. Goldman Sachs recently observed a growing valuation gap for the UK compared to the US.
The FTSE 100, which leans toward sectors like energy and mining, has risen nearly 8 percent this year. In contrast, the US benchmark S&P 500, known for housing high-growth enterprises like technology giants, has surged by approximately 27 percent over the same timeframe. French pay-TV company Canal+ is projected to be valued at over €6 billion upon its London listing on Monday.
If realized, this would represent the largest primary listing in London since Haleon’s separation from GSK in 2022. Nevertheless, a leading banker in London anticipates more listings migrating to the US in the year to come, especially among rapidly expanding firms. “The US boasts such a significant capital market compared to others that firms believe they’ll receive better offers there,” he remarked.
Sharon Bell, a European equity strategist at Goldman Sachs, pointed out that many businesses seeking higher valuations feel compelled to leave the UK due to a deficit of interest from domestic investors. Recent reforms — including proposed updates to the pensions framework and modifications to UK listing regulations — have yet to yield notable results. Chancellor Rachel Reeves recently referred to the Canal+ listing as “a testament to the UK’s capital markets,” emphasizing the government’s endeavors to maintain market stability and implement reforms.
Nonetheless, one executive from the FTSE 250 stressed that further actions are necessary to attract investors, suggesting that it does not rank high enough on the government’s agenda.
