London Stock Exchange faces ‘material depopulation’

The London Stock Exchange is grappling with a "material depopulation," according to a warning from a prominent investment bank. Pepple Hunt reported that there are currently 42 bids for London-listed companies, amounting to a combined market capitalisation of £74bn, which is more than double the £35bn from all of 2025 across 40 bids. 64% of these deals are from overseas bidders, similar to the previous year.

However, the increase in M&A activity has been accompanied by a scarcity of Initial Public Offerings (IPOs). Since the beginning of 2023, there have been 166 bids for firms valued over £100m, with a total value exceeding £180bn. In contrast, only 11 IPOs above £100m have taken place, amounting to a mere £6bn in value. Charles Hall, the head of research at Peel Hunt, emphasized that the UK's struggle to retain and list new companies is a severe issue.

The surge in bids for UK firms is at "exceptionally high levels," raising concerns about a material depopulation of the UK equity market. Airtel Money successfully completed its IPO on the London market last week, with a valuation of £5.3bn, marking the largest listing in five years. This was the first time since 2021 that the London Stock Exchange facilitated an IPO over £1bn.

The city has been struggling to compete with the appeal of US markets, leading to the loss of some of its top talent to exchanges across the Atlantic. Wise, a money transfer firm, moved its listing to New York last year, causing a significant blow to the City bourse.

Since 2023, seven UK giants have shifted their listings, resulting in a £120bn loss to the London market. Similarly, seven UK-based firms have also opted for overseas IPOs. The pace of delistings versus listings in the UK is widening, with one banker attributing this to the European markets lagging behind the US. Calls for government intervention are mounting, with suggestions to overhaul the capital gains regime for both domestic and overseas investors and expedite index inclusion.

City minister Lucy Rigby acknowledged that capital markets reform is ongoing and that the government is continuously seeking ways to enhance competitiveness. Ditching stamp duty on shares was proposed as a key measure to remove friction and boost UK competitiveness. However, the recent reforms have not been sufficient to stimulate listings.