Dry summer for London stock market as only two firms float

The dearth of new companies listing on the London Stock Exchange is reflected in figures showing that only two businesses joined the market in the third quarter of the year. They raised a total of £64.8 million, a drop of 82 per cent on the same period a year ago.
According to EY, the accountancy firm, there have been just ten listings on the market this year, raising a total of £584.6 million, down 47 per cent year-on-year.
Scott McCubbin, head of EY’s UK and Ireland initial public offering division, said the third quarter was typically a slow period for listings and that the October budget, and questions about the pace of interest rate cuts and the path of inflation, had led businesses to delay stock market flotation decisions.
“As we enter the final quarter of 2024, we anticipate some pick-up in IPO activity, but the timing of these could slip into early 2025,” he added. “Continued geopolitical instability in Ukraine, and now the Middle East, adds to the timing uncertainty but is supported by the backdrop of an improved deal pipeline.”
Worldwide IPO volumes in the third quarter outpaced performance earlier in the year, with 310 flotations raising a total of $24.9 billion.
Total volumes fell 14 per cent in the third quarter compared with the same period last year, with proceeds falling 35 per cent year-on-year, according to EY.
• London Stock Exchange says IPO pipeline is ‘building up’
Listing activity in the Americas and the rest of the European, Middle East, Indian and African region has remained resilient throughout the year, with digital-digit growth in deal numbers and proceeds compared with the previous year.
The Asia-Pacific region had a rebound in the third quarter, driven by increased activity in mainland China, Indonesia, Malaysia and South Korea.
This year the Financial Conduct Authority announced the biggest overhaul of rules for London-listed companies in three decades in an attempt to revive the UK’s capital markets.
London has struggled to compete with New York for listings of high-growth start-ups while some of the biggest UK companies, such as the bookmaker Flutter and the building materials group CRH, have moved their primary listings to the US.
• FCA plans biggest shake-up of London stock market listings for 30 years
The new rules hand more power to company bosses to make decisions without shareholder votes and give companies more flexibility to adopt dual-class share structures used by founders and venture capital firms, which give them stronger voting rights than other investors.
EY found that the artificial intelligence sector was one of the main drivers of IPOs, with more than 60 companies in the sector going public each year in the past two years, and about half turning a profit. A further 50 AI companies are registering for IPOs.
The accountancy firm said it expected that in the next year lower interest rates and easing inflation could boost new listings, particularly in sectors more sensitive to borrowing costs.