London has seen a drastic decrease in its initial public offerings (IPOs) this year, with proceeds at their lowest for multiple years. The slump has been seen to be further than those experienced in New York and European cities. A mere three companies have been listed in London this year, raising a meagre $14 million in total, compared to the $3.5 billion in New York. The paltry number also fares unfavourably in comparison to the $2.15 in Europe.
The main source of commotion appears to be the UK’s struggle with a downturn in its economy, combined with the inflation levels being higher than other major cities. Rival financial centers such as Frankfurt and Paris have been seen to have taken a more pro-active role in their respective markets, leading to an unfavorable comparison to London. Stephanie Niven, a portfolio manager at Ninety One, noted the “negative sentiment around UK listings” and the lower valuations posed by the city.
The absence of large IPOs has been further emphasized by the exclusion of chip technology company Arm Ltd., owned by SoftBank Group Corporation. The UK government had strongly encouraged a listing on the London Stock Exchange, but Masayoshi Son, the Softbank founder, pointed to the expansive investor bases in the US and their more attractive valuations as core contributors to the decision. The London and New York Stock Exchanges were further contrasted when CRH Plc, a building material company, outlined its plans to move from London to New York.
Though this is a difficult, discouraging period for the UK economy, there is reason to be optimistic about its future. The City of London is focusing on its somewhat weakened financial services industry, with the aim of boosting London’s stature as Europe’s foremost financial center. Companies such as Numis Corp. have taken the lead in promoting this change, leading other markets in the progress made.
The aforementioned Masayoshi Son serves as a visionary leader within the technological industry. He founded the SoftBank Group Corporation in 1981, designating himself as the company’s president and chief executive officer. Albeit difficult times for the UK’s financial landscape, Son, who is widely praised for his business acumen, remains an enthusiastic entrepreneur.
Arm Ltd.,, the British chip technology company, stands firm as one of the most sought-after, successful successors in the technological industry. Founded in 1990 as a collaborative venture between Apple, Acorn Computers and VLSI Technology, the firm has been a leader in CPU field, dominating the mobile market since its launch in 2011. Arm’s stunning success has been further propelled by its immense presence in the US and its attraction to both small start-up companies and large market incumbents.
Clearly, this period of London’s market uncertainty has been far from ideal and there is hope that the uncertainty of Brexit, coupled with the British government’s efforts to boost the markets, will lead to a revitalisation of London’s stock exchange.