A boss at a leading US stock exchange says the trend of UK companies going to New York to raise funds will continue.
Karen Snow, global head of listings at Nasdaq, helped lure Cambridge-based chip designer Arm Holdings to float on that exchange and told the BBC that other UK tech firms will follow.
Arm raised $4.87bn (£3.8bn) on Nasdaq in September, despite heavy lobbying to list its shares in London instead. The Nasdaq raised $13bn in 2023 while the London Stock Exchange raised $972m.
Although there has always been a significant gap between the two exchanges, this year looks set to be the first time the LSE has failed to hit the $1bn mark for money raised for companies floating on it since records began in 1995, according to data from Dealogic.
‘We're getting a lot of calls'
Mrs Snow agreed when asked if the Arm listing coup was indicative of a trend of her index luring UK companies away from their home financial capital market.
“We're having a lot of conversations with companies about listing in the US. We get a lot of inbound calls [from the UK] and we also make sure we're in front of the right CEOs,” she said. Mrs Snow said there were many conversations already under way to get more UK companies to cross the pond and raise money through a Nasdaq listing.
The LSE is seen as a pivotal part of London's position as a financial capital, and the pipeline of initial public offerings (IPOs), the process where companies raise money by selling shares in their business, supports financial services jobs in the City of London and beyond.
The government has been implementing post-Brexit reforms aiming to overhaul financial regulation to improve London's attractiveness in comparison with other European rivals such as Paris and Frankfurt. But earlier this month, MPs on the Treasury Committee branded these measures – dubbed the Edinburgh Reforms – “a damp squib”.
When it comes to where companies choose to list their shares, in recent months several firms have moved their listings away from London, or hinted that they will do so. Travel giant Tui is considering quitting the LSE in favour of a single listing in Frankfurt.
Paddy Power and Betfair owner Flutter says it will list its shares in the US from 29 January. Although its primary listing will remain in the UK, there has been speculation that it could switch its main listing to the US at a later date.
And prior to Arm listing its shares in New York, building supplies firm CRH and plumbing company Ferguson also shifted their listings to the US. The two rival financial capitals are also reportedly launching respective charm offensives to get Chinese fast-fashion company Shein to list its shares on their exchanges.
Helena Morrissey, a finance veteran with top roles at investment firms Newton Asset Management, Legal & General and AJ Bell, said that while London was still very innovative, “it feels less confident and energetic”.
“It's hard to retain confidence in the face of well-publicised decisions to list elsewhere,” she said
Baroness Morrissey said there was a long-held perception that international firms would get higher valuations when selling their shares on US stock exchanges, and that UK investors were relatively more risk averse than their American counterparts.
“So we have an image problem, not helped by revelations about low levels of investment in domestic equities by UK asset owners – pension funds.
“We need to have the self-belief to invest in Britain – but it needs to be based on reality, not just a PR campaign.”
— CutC by bbc.com
