- Near-6% stake sale via discounted placing
- Shares in London Stock Exchange tumble 4%
- Is London losing its public listings allure?
News came today (17 May) that London Stock Exchange (LSEG) stake owners have sold a 33 million slug of stock in the UK’s main stock market operator.
An investor consortium, including US buyout firm Blackstone and financial data and news firm Thomson Reuters, sold 33 million shares in the FTSE 100 company at £80.50 per share, a 5% discount to the LSE’s previous closing price of £84.74. That’s about 6% of LSE’s total share count, according to data from Investing.com.
The sale was via a share placing that had been increased from 28 million shares, investors were told.
Cue LSE’s 4% share price slump as investors rethink, narrowing the valuation gap. LSE shares are currently changing hands at £81.34, still above the placing price, but not by much (about 1%).
NOTHING TO SEE HERE
Is this business as usual for investors that never intended to own LSE shares long-term or a sniff of something more worrying for UK stock markets?
The investor consortium ended up with its LSE stake when it sold financial data firm Refinitiv to the UK bourse operator in 2021.
This latest stock sale follows an earlier disposal of more than $2 billion worth of shares in March by Blackstone and Thomson Reuters following the end of lock-up arrangements after the Refinitiv sale. They continue to control about 5.1 million LSE shares, which are now subject to further 90-day lock-up conditions, according to Barclays, one of the investment banks running the sale, meaning Blackstone and Thomson Reuters are forbidden from selling them for the next three months.
UK LISTINGS CRISIS
The other, less charitable view might be that this represents another blow for the UK in the global stock markets beauty pageant.
The UK has been struggling to attract new companies of genuine global scale for years, particularly in high-growth areas like technology, healthcare, and biotech. Even plenty of British-based growth businesses have spurned London for New York in recent years, such as digital transformation business Endava (DAVA:NYSE), payments firm Paysafe (PSFE:NYSE) and digital medical diagnosis firm Babylon Health (BBLN:NYSE).
In March, Cambridge-based microchip designer Arm, snubbed London in favour of a New York Stock Exchange despite lobbying by three UK prime ministers. It is planning an IPO (initial public offering) later this year, with valuation estimates ranging from $30 billion to $70 billion, according to Bloomberg.
The fear is not just about London’s pull for new companies, but that it could lead to an exodus of existing ones too. FTSE 100’s like CRH (CRH), Flutter (FLTR) and Shell (SHEL) are either readying a switch across the Atlantic or thinking about it, echoing long-held complaints from technology and biotech companies.
Plumbing supplies group Ferguson (FERG) made the dual-listing move last year, and there is now talk of London losing its European financial crown to Paris.
MAKING LONDON ALLURING
Access to talent, incentives for innovation and lightening the regulatory load were all identified by Deloitte in research that looked at what might make the UK a more attractive IPO opportunity for firms.
Some progress has been made, such as reducing the free float requirement from 25% to 10% and allowing dual-class share structures. But the debate will continue over the UK’s ability to balance listing reforms while maintaining its high regulatory standards. The clock, it seems, is ticking for UK stock markets to find solutions.
