Chancellor's IPO push still lacks momentum

Observer

17 hours ago

The most recurring question in the financial district of London is: how do you reverse the alarming decline in the capital's attractiveness as a destination for Initial Public Offerings (IPOs). Going by the statistics, it's a question that needs to be addressed with some urgency.
Data compiled by EY, the professional services firm, shows that in the first quarter of this year, only five companies listed on the London stock market. Collectively, they raised just £74.7m in proceeds – a 74 per cent year-on-year fall in the same period in 2024.
It was hoped that the Chinese on-line fashion giant, Shein, valued at $100 billion, might be the panacea to London's listing struggles. But the company dumped its plan for an IPO in London after failing to win support from regulators in China, as sources told Reuters. They now plan to list in Hong Kong.
Economic secretary to the Treasury, Emma Reynolds met executives from technology companies including the bank Revolut, Monzo, Oaknorth, to seek to address London's IPO conundrum.
Ministers' level of engagement with industry cannot ne faulted – both Reynolds and the Chancellor Rachel Reeves, have held numerous meetings with company bosses on this matter hoping to convince them to list on the London Stock Exchange. Listing of these top fintech names would provide a badly needed boost to the embattled LSE.
The prospect of meaningful action remains unclear, however, in the latest meeting, executives cited the need for tax breaks both on buying UK shares and a capital gains tax cut for employees when offloading their stock, according to people close to the discussions. They called for restrictions on non-executive directors holding – or being paid – shares in order to give them greater incentive to benefit from the growth of their businesses to be removed.
One of those who attended the meeting put it starkly: unless a cluster of the companies represented in the meeting choose to list in London, the potential for any real momentum to be injected back into Uk markets will be severely curtailed, they warned. For that to happen they will need significantly greater incentives than those currently on offer.
While both Revolut and Monzo have been rumoured to be considering IPOs, and have engaged with UK authorities about listing in London, neither has made a formal announcement or set a date for an IPO.
FILE PHOTO: A worker shelters from the rain as he passes the London Stock Exchange in London
Revolut has expressed interest in listing on either the London Stock Exchange (LSE) or Nasdaq, but has also indicated a preference for the US market. A potential IPO for Revolut has been discussed. They have been given a banking licence but are building out their banking operations before launching fully as a bank. Revolut CEO Nik Storonsky has publicly stated that a London listing is "not rational" compared to the US market's liquidity and lower trading costs.
Monzo, the UK-based digital bank, is also considering an IPO, with potential listings in London or New York. While the LSE is a likely contender due to Monzo's UK headquarters and customer base, the company is also weighing the benefits of a US listing. Some investors fear Monzo may snub the LSE for a US listing, particularly given Monzo's rapid expansion in the US.
Oaknorth has been the subject of discussions with UK authorities regarding a potential London listing. The UK government is reportedly trying to persuade these fintech companies to list in London, rather than New York. While Oaknorth is also considering an IPO, details about their plans are less publicly available than those of Revolut and Monzo.
Changes have been encouraged by a task force set up to try to revive London's market. But LSE boss Julia Hoggett, who is spearheading the campaign, admitted in a speech last week: 'We still have not seen the real turning point in terms of risk capital within and into the UK.