London ownership trade suffers biggest exodus since financial crisis

The London ownership trade is on course for its worst year for departures since the financial crisis, as fears mount that more FTSE 100 businesses will quit the UK in favour of recent York.

A total of 88 companies have delisted or transferred their primary listing from London’s main trade this year with only 18 taking their place, according to the London ownership trade throng.

This marks the biggest net outflow of companies from the main trade since 2009, while the number of recent listings is also on course to be the lowest in 15 years as initial community offerings remain scarce and bidders target London-listed groups.

The exodus has continued despite efforts by the UK government, regulators and the LSE to boost the City’s attractiveness by reforming trade rules and the domestic pensions structure.

Ashtead, the equipment rental corporation with a £23bn trade evaluation, this month became the latest large business to propose moving its primary listing from London to recent York. It would join six other FTSE 100 groups to have ditched the blue-chip index in favour of overseas venues since 2020.

Including Ashtead, these movers had a combined trade evaluation close to £280bn on Friday — about 14 per cent of the current total worth of the FTSE 100.

The defectors include £39bn gambling giant Flutter, which owns Paddy Power, and £55bn building materials throng CRH. Both have moved their main listing to recent York in the history 18 months.

A series of takeovers by private stake bidders has also depleted the trade. Cybersecurity throng Darktrace and property platform Hargreaves Lansdown are among those that have agreed to be bought this year.

“We cannot be taken seriously as a global chief in finance if we do not have a thriving stake pool trade,” said Charles Hall, head of research at stockbroker Peel Hunt.

“The UK trade does not have any god-given correct to be a leading listing venue, but it requires nurturing and back to be successful in a trade that is increasingly global,” said Hall, adding that “more companies will depart” unless action is taken.

Factors cited by companies moving their main listing to recent York include a deeper pool of investors and the prospect of better ability to pay in their shares.

For some, the shift reflects the growth of their North American operations. Ashtead makes 98 per cent of its operating profits in the US, while plumbing throng Ferguson, which moved in 2022, derives 99 per cent.

Nine companies in the FTSE 100 glean more than half of their profits from the US, according to lender of America, including data throng Experian and education corporation Pearson.

Analysis by the financial Times last year identified London as the European ownership trade most at hazard of suffering departures of large companies to the US.

The analysis ranked companies based on their evaluation discount compared with a throng of US peers, the distribute of their revenues generated in the US and the proportion of North American investors on their register.

The 18 large London-listed groups identified as flight risks included Rio Tinto and British American Tobacco. The pair have been pressured by investors to shift their primary listing to Australia and the US, respectively.

“More UK companies are thinking about moving their listings to the US, and the UK’s evaluation gap to the US has become larger,” said Goldman Sachs in a note on Friday.

The FTSE 100, oriented towards “ancient economy” sectors such as vigor and mining, has gained nearly 8 per cent this year. The US standard S&P 500 — home to higher-growth stocks such as the Magnificent Seven technology groups — has generated roughly 27 per cent over the same period.

French pay-TV operator Canal+ could be valued at more than €6bn after it lists in London on Monday as part of its split from media conglomerate Vivendi, according to analysts and people close to the operation. That evaluation would make it the largest primary listing in London since Haleon was spun out of GSK in 2022.

But one elder banker in London said they expected more listings to transfer to the US next year, particularly among quick-growing businesses. “The US is now such a large pool trade relative to anywhere else that [generally] people feel they’re going to get a better deal in the US,” he said.

Sharon Bell, a European stake strategist at Goldman Sachs, said many businesses searching for higher valuations felt forced away from the UK by a lack of domestic investor earnings.

“It is very unhappy,” said one FTSE 100 chief executive following Ashtead’s announcement. The “America first” rhetoric of president-elect Donald Trump could also push companies to speed up any delisting plans, the executive added.

Many advisers and executives declare privately that recent reforms — including planned changes to the pensions structure and an overhaul of the UK’s listing rules — have not yet moved the dial.

But LSEG chief David Schwimmer said last year that the concept that a US listing offered a higher evaluation was “a myth”.

City advisers aspiration the UK trade will get a shot in the arm if China-founded quick-fashion throng Shein presses ahead with a planned IPO in London.

“Companies will make bespoke decisions that are pertinent to their business mix and location,” said LSEG in a statement. “The UK trade remains the third-largest in the globe by pool raised year to date and is seeing the most dynamic set of reforms anywhere in the globe.”

Chancellor Rachel Reeves said on Friday that the Canal+ listing was “a vote of confidence in the UK’s pool markets, the stability we are delivering and our schedule for transformation”. 

But one FTSE 250 executive said that more needed to be done to entice investors.

“I don’t ponder it’s high on the government’s priority list,” the executive said, “even if it’s something they regularly trot out.”

Visualisation by Alan Smith and Patrick Mathurin. Additional reporting by Ivan Levingston and Mari Novik in London