Just Eat Takeaway abandoning the London Stock Exchange “highlights a troubling trend” for UK markets as the government struggles to keep companies listed in Britain.
The takeaway delivery company cited low liquidity, burdensome regulatory requirements, and high costs as key reasons for its move, which analysts said underscored the uncompetitiveness of London’s equity markets.
“If trading is thin in London, it’s hard to justify the costs of retaining the listing,” said Dan Coatsworth, investment analyst at AJ Bell.
“British shares trade at a 40-60 per cent discount to global peers, forcing companies to pay steep dilution costs to raise capital,” added Andrew Craig, founder of Plain English Finance.
“This weakens UK firms, drives them abroad, and erodes the country’s wealth, jobs, and innovation – further exacerbating the hollowing out of the British economy.”
The news comes as Chancellor Rachel Reeves met figures from a number of leading tech companies today to encourage them to expand and invest in the UK.
City Minister Tulip Siddiq, the head of the FCA Nikhil Rathi and chief executive of the London Stock Exchange Julia Hoggett also attended the meeting.
Just Eat’s departure also throws into question the new regulatory reforms made by the Financial Conduct Authority to make the UK a more attractive place to list.
Reforms introduced earlier this year were meant to be the biggest shake-up of listing rules in over 30 years, but so far have not managed to attract many more companies in.
However, Coastworth noted that the listing changes were not meant to attract companies with secondary listings in London upgrading to a primary listing, “so Just Eat’s impending departure is not a black mark on the LSE’s record”.
“The changes are more beneficial to companies that are only listed in London and which previously didn’t qualify for the FTSE indices under the old rules because they had chosen a tier-two category for various reasons such as looser regulation.”
Examples of this include Just Eat competitor Deliveroo, which is set to be promoted to the FTSE 250 next month after the changes to the two-tier system.
“There is untapped demand to invest in UK listings,” concluded Susannah Streeter, head of money and markets at Hargreaves Lansdown.
“The Raspberry Pi IPO was significantly oversubscribed by retail investors, so there are still supply side issues to fix. All too often retail investors are cut out of IPOs and secondary capital raising rounds.”