The number of companies leaving the London Stock Exchange (LSE) is at its highest level in over a decade, according to Bloomberg. In 2024, a total of 45 companies have already delisted, which is 10% more than last year and the most since 2010. This sharp increase in delistings is a clear sign that something is wrong with London’s financial market.
At the same time, something unexpected is happening. While companies are leaving, the number of deals involving UK companies has skyrocketed. In 2024, the value of these deals has surged by 81%, reaching over $160 billion. This means that while many companies are choosing to leave the LSE, investors are still interested in buying British companies.
However, things aren’t all rosy for the UK stock market. Only 11 companies have gone public in London this year, raising just $1 billion, which is down by 11% from last year. This decline in Initial Public Offerings (IPOs) shows that many companies aren’t finding the London market attractive anymore.
According to Liad Meidar, a partner at the investment firm Gatemore Capital Management, the UK needs to fix its problems or risk losing even more ground. He points out that UK companies are struggling to get the funding they need or reach the valuations they want. Simply put, companies can’t get the right deal on the London Stock Exchange, which is pushing them to look elsewhere.
International private equity firms have been particularly active in taking over UK companies. In November, Florida-based Starwood Capital Group bought London-listed Balanced Commercial Property Trust for $852 million. Other firms, like Sweden’s EQT and Chicago-based Thoma Bravo, have been snapping up companies like videogame services company Keywords Studios for $2.7 billion and cybersecurity provider Darktrace for $5.3 billion.
Despite the troubling delisting trend, some believe there are still opportunities in the UK market. British stocks are trading at a massive discount, more than 40% cheaper compared to other global markets. This has attracted bargain hunters looking for undervalued companies.
However, experts warn that the UK stock market is at a tipping point. Joachim Klement, a strategist at Panmure Liberum, says that if the UK wants to remain the financial hub of Europe, it must act quickly. Major reforms are needed, including changes to the way investment banks, the LSE, and regulators operate. Without these changes, London’s future as a global financial center is uncertain.
In summary, while some investors are still eyeing the UK stock market for deals, the number of companies leaving and the decline in IPOs paint a worrying picture. London must act fast to regain its relevance in the global financial world.
