London’s bid to revive its shrinking stock market has faced a series of setbacks in recent weeks, with companies shifting listings and IPO plans from the market.
Money transfer company Wise Plc unveiled a plan on Thursday morning to move its primary listing to the US, just after Cobalt Holdings Plc gave up on its plans to raise about US$230 million in an initial public offering the evening before it was due to start trading. Meanwhile, the city’s best hopes for an imminent blockbuster offering were dented last week when Shein Group Ltd turned its attention to Hong Kong for its IPO.
“The UK stock market is like a boxer determined to keep going in a grueling fight,” Russ Mould, investment director at AJ Bell wrote in a note.
To be sure, the week has also seen Valterra Platinum Ltd debut in London, with the firm adding a secondary listing there after its spinoff from Anglo American Plc. The same day, drugmaker Indivior Plc revealed plans to cancel its secondary UK listing, citing low trading on the exchange — nearly a year after moving its primary listing to New York.
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A representative for the London Stock Exchange declined to comment on Thursday. A US listing might not immediately lead to material bump in valuation. Companies that have moved their main listing overseas in recent years including CRH Plc, Flutter Entertainment Plc and Ferguson Enterprises Inc have not seen their relative valuation to peers change dramatically since the switch, according to an analysis earlier this year by the exchange.
Cobalt Holdings did not give further details on its decision to shelve its IPO on Wednesday evening, only suggesting it would seek to fund its agreement to buy cobalt from Glencore Plc. Mould noted there could be industry and company-specific factors at play, with investors may be looking for something with “a less marked risk profile” amid trade wars and waning interest in electric vehicles — which support demand for the cobalt market.
Wise, meanwhile, cited the opportunity to find new investors, improve the liquidity in its stock and be eligible for key indexes, in a statement. The company has a dual-class share structure, leaving the CEO with about half the voting rights in the company. In London, that has meant the company is not eligible for inclusion in the FTSE UK benchmarks, which can help improve valuations as passive fund managers buy stocks.
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In the US, meanwhile, founders retaining control in technology companies is considered normal, with Alphabet Inc founders Larry Page and Sergey Brin and Meta Platforms Inc founder Mark Zuckerberg all retaining the majority of voting rights.
London’s muted offerings and shrinking market is in stark contrast to equity capital markets around the world beyond Europe, which are abuzz with listings. In the US, stablecoin firm Circle Internet Group Inc. priced its upsized IPO above the guided range, while cloud infrastructure company CoreWeave Inc’s shares are up more than 300% after its IPO. In Asia, battery-maker Contemporary Amperex Technology Co pulled off a US$5.2 billion listing.
“Despite concern on the erosion of US exceptionalism, it is evident that international corporates remain lured to the US capital markets for its depth, liquidity and ecosystem,” said Janet Mui, head of market analysis at RBC Brewin Dolphin said. “US-listed companies, particularly those in tech, can still demand much higher valuations than elsewhere.”
