European stock markets are outshining London as they capture a larger portion of the market for company share offerings.
This year, the UK has garnered only 2% of the $11.9 billion raised through initial public offerings (IPOs) in Europe, as per Bloomberg’s data. This marks London’s lowest share in decades, a stark contrast to an average of 31% from 2012 to 2023.
The diminished attractiveness of the UK market is underscored by its stocks trading at a significant discount compared to major international markets, enticing companies to seek higher valuations by listing elsewhere.
This scenario has also made numerous companies prime targets for acquisitions, exemplified by engineering group Wood’s recent rejection of a £1.4 billion takeover offer from Sidara.
The FTSE AIM market is not dying, but it is sick.
Charles Hall, head of research at Peel Hunt, commented, “The UK has become relatively unattractive as a listing venue, with fund outflows significantly affecting both valuations and the capital available for IPOs.”
He has previously expressed concerns that the FTSE small cap index might disappear by 2028 if the current rate of takeovers continues. From 160 companies in 2018, the index is anticipated to shrink to just 100 by year’s end.
On a brighter note, the FTSE 100 has been rebounding, achieving a series of record highs since April 22 and climbing 3.8% since then. Overall, the index has risen 7.8% this year.
