Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The London Stock Exchange is on course for its worst year for departures since the financial crisis, as fears mount that more FTSE 100 businesses will quit the UK in favour of New York.
A total of 88 companies have delisted or transferred their primary listing from London’s main market this year with only 18 taking their place, according to the London Stock Exchange Group.
This marks the biggest net outflow of companies from the main market since 2009, while the number of new listings is also on course to be the lowest in 15 years as initial public offerings remain scarce and bidders target London-listed groups.
The exodus has continued despite efforts by the UK government, regulators and the LSE to boost the City’s attractiveness by reforming market rules and the domestic pensions system.
Ashtead, the equipment rental company with a £23bn market valuation, this month became the latest big business to propose moving its primary listing from London to New York. It would join six other FTSE 100 groups to have ditched the blue-chip index in favour of overseas venues since 2020.
Including Ashtead, these movers had a combined market valuation close to £280bn on Friday — about 14 per cent of the current total value of the FTSE 100.
The defectors include £39bn gambling giant Flutter, which owns Paddy Power, and £55bn building materials group CRH. Both have moved their main listing to New York in the past 18 months.
A series of takeovers by private equity bidders has also depleted the exchange. Cybersecurity group Darktrace and investment platform Hargreaves Lansdown are among those that have agreed to be bought this year.
“We cannot be taken seriously as a global leader in finance if we do not have a thriving equity capital market,” said Charles Hall, head of research at stockbroker Peel Hunt.
“The UK market does not have any god-given right to be a leading listing venue, but it requires nurturing and support to be successful in a market that is increasingly global,” said Hall, adding that “more companies will depart” unless action is taken.
Factors cited by companies moving their main listing to New York include a deeper pool of investors and the prospect of better liquidity in their shares.
For some, the move reflects the growth of their North American operations. Ashtead makes 98 per cent of its operating profit in the US, while plumbing group Ferguson, which moved in 2022, derives 99 per cent.
Nine companies in the FTSE 100 glean more than half of their revenue from the US, according to Bank of America, including data group Experian and education company Pearson.
Analysis by the Financial Times last year identified London as the European stock exchange most at risk of suffering departures of big companies to the US.
The analysis ranked companies based on their valuation discount compared with a group of US peers, the share of their revenues generated in the US and the proportion of North American investors on their register.
The 18 large London-listed groups identified as flight risks included Rio Tinto and British American Tobacco. The pair have been pressured by investors to move their primary listing to Australia and the US, respectively.
“More UK companies are thinking about moving their listings to the US, and the UK’s valuation gap to the US has become larger,” said Goldman Sachs in a note on Friday.
The FTSE 100, oriented towards “old economy” sectors such as energy and mining, has gained nearly 8 per cent this year. The US benchmark S&P 500 — home to higher-growth stocks such as the Magnificent Seven technology groups — has generated roughly 27 per cent over the same period.
French pay-TV operator Canal+ could be valued at more than €6bn after it lists in London on Monday as part of its split from media conglomerate Vivendi, according to analysts and people close to the operation. That valuation would make it the largest primary listing in London since Haleon was spun out of GSK in 2022.
But one senior banker in London said they expected more listings to transfer to the US next year, particularly among fast-growing businesses. “The US is now such a big capital market relative to anywhere else that [generally] people feel they’re going to get a better deal in the US,” he said.
Sharon Bell, a European equity strategist at Goldman Sachs, said many businesses searching for higher valuations felt forced away from the UK by a lack of domestic investor interest.
“It is very sad,” said one FTSE 100 chief executive following Ashtead’s announcement. The “America first” rhetoric of president-elect Donald Trump could also push companies to speed up any delisting plans, the executive added.
Many advisers and executives say privately that recent reforms — including planned changes to the pensions system and an overhaul of the UK’s listing rules — have not yet moved the dial.
But LSEG chief David Schwimmer said last year that the idea that a US listing offered a higher valuation was “a myth”.
City advisers hope the UK market will get a shot in the arm if China-founded fast-fashion group Shein presses ahead with a planned IPO in London.
“Companies will make bespoke decisions that are pertinent to their business mix and location,” said LSEG in a statement. “The UK market remains the third-largest in the world by capital raised year to date and is seeing the most dynamic set of reforms anywhere in the world.”
Chancellor Rachel Reeves said on Friday that the Canal+ listing was “a vote of confidence in the UK’s capital markets, the stability we are delivering and our plan for change”.
But one FTSE 250 executive said that more needed to be done to entice investors.
“I don’t think it’s high on the government’s priority list,” the executive said, “even if it’s something they regularly trot out.”
Visualisation by Alan Smith and Patrick Mathurin. Additional reporting by Ivan Levingston and Mari Novik in London