Copyright Benzinga
In the third quarter, the London Stock Exchange (LSE) dropped out of the top 20 global IPO markets for the first time in many years, ranking 23rd in the Bloomberg rating. This is an unexpected turn for an exchange that has long ranked among the world's leading venues for public offerings and attracted capital from across the globe for decades. In the current ranking, it was surpassed by the exchanges in Singapore, Mexico, and even Oman. London may be losing volume, but not control At first glance, it may indeed seem that London is losing its influence. But if you look deeper, the root cause is that IPOs themselves have lost popularity in recent years: due to high interest rates, many companies preferred to postpone going public. According to EY reports by the end of 2024, the total number of global IPOs was 1215, compared to 1351 in 2023. Investors have also been cautious. In the current environment, it is pretty difficult to predict which companies going public will be successful and which will not. So, capital has been directed to other instruments. However, the situation is gradually changing: interest rates around the world are falling, opening a window of opportunity, especially for technology companies. Britain's Post-Brexit Regulatory Against this backdrop, each economy reacted in its own way. The UK decided not to wait for external conditions to improve, but to seize the moment to make systemic changes. After Brexit, the UK began to build its own regulatory system, independent of Brussels and Washington. The country effectively acknowledged that it would not be able to meet both European and American standards at the same time and decided to develop its own British model of regulation. You might settle for a slice of a sprawling feast that doesn't suit your appetite. Or, you could prepare your own pudding-perhaps less grand, but crafted to your liking. London has embraced the pudding approach. This means that the United Kingdom understands that it is losing volume, but wants to build a system in which it sets the rules of the game and doesn’t have to contend with foreign bureaucracy. In the rankings this looks like a decline and a decrease in attractiveness, but what we are seeing here is a change of model. London remains an important center of capital, but its role now – to demonstrate autonomy. So, why are some companies leaving the British market? In fact, each company makes its own decision about where to go public, and it is not always because of bias against London. Unilever (LSE:ULVR), for example, is not leaving Britain at all. Post-Brexit, however, regulatory divergence made it impractical to maintain equal footing across both EU and UK frameworks. As a company with deep European roots, Unilever has designated Amsterdam as the primary listing for its ice cream division while retaining a secondary listing in London. This isn't a complete departure, its more like a strategic rebalancing that keeps London as part of its dual-listing structure, ensuring access to the U.S. and U.K. markets without full relocation. In addition, the self-identification of companies also plays a role. Take, for example, the ESG agenda. Formally, it exists in both Europe and the UK, but even within this acronym (environmental, social, governance), the emphasis is different in different regions. For Europe, ESG is a mandatory part of any regulations with a strong focus on environmental friendliness. In the UK, the approach is more flexible, with greater attention paid to social issues in some areas. That is why companies choose the market that is closer to their philosophy. Ultimately, this is not a question of London losing its appeal. Asian markets are growing, but not forever At the same time, there is no point in denying that the role of Asian markets is constantly growing. Over the past year, the total volume of IPOs in Asia has skyrocketed by 80%. Nevertheless, it seems that the prospects for these markets are now exaggerated a little bit. Yet, this momentum follows a familiar historical pattern seen in several economies. Japan in the 1980s, South Korea in the 1990s, and China in the 2000s each experienced explosive export-led growth, only to face structural slowdowns as demographic pressures, rising debt, and shifting global trade dynamics took hold. The transitions weren't uniform or inevitable, but they do highlight recurring challenges in sustaining high growth over decades. Of course, we can single out Singapore with its adaptive management system and resilience, but it remains the exception rather than the rule. For this reason, we should continue to treat Asia with caution as a reliable engine of long-term stable growth. In the short term, I would rather bet on Europe. For example, more and more companies are going public in Poland, while others are choosing Amsterdam and Stockholm. And this is just one of many examples of how European markets are quite capable of growing steadily. The main thing is not to give in to alarmist sentiments, but to look at any market calmly and without undue panic. London has certainly lost some of its volume, but in my opinion, it should not be written off.
