City grandees are talking up a potential rebound for the beleaguered London Stock Exchange this year as fast fashion giant Shein and computer firm Raspberry Pi reportedly plot bumper listings in the capital.
The two big-ticket listings would come as a much-needed boost for London’s struggling stock market, which has been hit by a dearth of IPOs, heavy investor outflows and an exodus of firms delisting or being taken private.
The government and regulators are racing to implement a slew of capital market reforms to boost London’s attractiveness as a trading venue.
“The pipeline is becoming increasingly encouraging,” the London Stock Exchange’s deputy chief executive Charlie Walker told City A.M. on Friday, prior to reports that Shein and Raspberry Pi were plotting London floats.
“While we are focused on the IPO pipeline over the next few months, across the ecosystem we are also focused on making sure that the UK capital markets are competitive for the years to come.”
The comments echo those of David Schwimmer, chief of the LSE’s owner, who earlier this year said the bourse was primed for an “aggressive” push to revive listings activity after just 23 firms floated in London last year – the slowest period for IPOs since the financial crisis.
In December, the Financial Conduct Authority revealed plans to overhaul listing rules in a bid to boost its appeal. Meanwhile, chancellor Jeremy Hunt said in March that the Treasury would force pension funds to disclose their equity holdings to encourage more UK investment after a dramatic slide in recent years.
Many firms are tempted by the deeper pool of capital and high valuations offered by New York, although analysts have pointed out that it is not a sure-fire route to success.
LSE data shows that of the 20 British firms that have raised more than $100m in the US over the last decade, eight have delisted, three are above their IPO price and the rest are trading down by an average of 71 per cent.
“Although some firms have had their heads turned by Wall Street, the figures show that the majority of UK firms choose to list in the UK, and only five firms have decided to move to the US in the past decade,” City minister Bim Afolami told City A.M.
“We’ve had great economic news recently – with inflation falling and strong GDP growth, the economy is turning a corner,” he added. “I’m ready to seize on this positivity and bang the drum for Britain as one of the best places in the world to invest.”
Mark Austin, a lawyer at Latham & Watkins and author of a government-commissioned review of the UK’s capital markets, added: “Although we are a more liquid market than the lazy myths would have you believe, there is more we can do, and igniting the demand side is the focus now. Put all that together and combine it with a positive narrative and you have a match fit market again.”
Shein, which was founded in China but is now headquartered in Singapore, is reportedly stepping up preparations for a London Stock Exchange listing following regulatory hurdles and pushback from lawmakers in the US.
According to Reuters, the firm was valued at $66bn in a fundraising last year. It is said to be planning to update China’s securities regulator on the change of its listing venue from New York to London and file with the London Stock Exchange as soon as this month.
Separately, The Sunday Times reported on Saturday that Cambridge-based Raspberry Pi was finalising plans to float in London this month in a transaction that could value it at up to £500m.
Raspberry Pi previously aimed for a London float in 2021 but shelved plans after Russia’s invasion of Ukraine upset global stock markets. Meanwhile, it was also hit by a worldwide shortage of semiconductor chips.
Shein and Raspberry Pi declined to comment.
Raspberry Pi picking London over New York is a major win for the UK after its charm offensive failed to convince chipmaker Arm to list in the capital last year. Arm’s shares have soared nearly 80 per cent since it floated on the Nasdaq in September.