The CEO of Peel Hunt, a prominent broker in the City, has dismissed concerns of a mass exodus of companies from London to list in New York, stating that it would only make sense for businesses primarily operating in the US.
London’s struggle to attract new listings was highlighted after WE Soda, the world’s largest soda ash maker, withdrew its plans for a $7.5 billion initial public offering.
This difficulty in enticing companies to go public has also affected Peel Hunt, which advises UK businesses on IPOs and deals, as well as providing research on London-listed groups.
According to data from Refinitiv, only five companies have listed in London this year, raising approximately £30 million. CRH, a building materials group, moving its primary listing from London to New York in March further exacerbated concerns about London’s appeal.
Nevertheless, Steven Fine, Peel Hunt’s CEO, pointed out that moving a listing to New York has “strong caveats.” He highlighted the higher litigation risks in the US and the challenge of standing out in a market dominated by much larger companies.
“Investors want to support US companies led by US executives who are present in the US, not a CEO who visits every three months,” Fine noted, referring to the investor base in the US.
Although Fine acknowledged the fallout from last year’s “mini” Budget fiasco and persistent high inflation as challenges for the UK, he expects London to see a recovery in the global IPO market.
In its recent full-year results, Peel Hunt observed “tentative signs” of increased M&A activity across the sector in the last quarter, as attractive valuations enticed buyers to target UK companies.
Peel Hunt has been expanding its M&A advisory business over the past year to diversify its revenue stream. The company reported a pre-tax loss of £1.5 million for the year ending March 31, compared to a £41 million profit in the previous period.
“It has been an incredibly challenging period,” Fine acknowledged. However, he emphasized that WE Soda’s decision to withdraw its IPO plan stemmed from concerns over the company’s valuation rather than a broader issue in the London market.
“No one wants an IPO to perform poorly in the secondary market; that sends negative signals,” Fine added.
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