UK Companies Flock to Nasdaq: The London Stock Exchange Faces Challenges
The global head of listings at Nasdaq, Karen Snow, predicts a continued trend of UK companies seeking funds in New York rather than the London Stock Exchange (LSE). Following the successful listing of Cambridge-based chip designer Arm Holdings on Nasdaq, raising $4.87 billion in September, Snow states that conversations are underway with numerous UK tech firms considering a Nasdaq listing.
The stark contrast in funds raised between Nasdaq and the LSE in 2023 underscores this trend, with Nasdaq securing $13 billion compared to the LSE’s $972 million. Notably, this year may mark the first time the LSE falls below the $1 billion mark for money raised since records began in 1995, according to Dealogic data.
Karen Snow confirms the trend, stating, “We’re having a lot of conversations with companies about listing in the US. We get a lot of inbound calls [from the UK], and we also make sure we’re in front of the right CEOs.”
The LSE, crucial for London’s standing as a financial capital, faces challenges as companies explore alternative listings. Despite post-Brexit reforms aiming to enhance London’s appeal, recent moves by firms like Tui, considering a single listing in Frankfurt, and Flutter, planning a US listing as of January 29, signal a shift away from the LSE.
Arm’s decision to list on Nasdaq preceded similar moves by CRH and Ferguson, further amplifying the competition between financial capitals. London and New York are reportedly vying to attract Chinese fast-fashion company Shein for its stock listing.
Finance veteran Helena Morrissey acknowledges London’s innovation but notes a decline in confidence, stating, “It’s hard to retain confidence in the face of well-publicised decisions to list elsewhere.” She highlights an image problem for the UK, citing perceptions of higher valuations on US stock exchanges and UK investors’ purported risk aversion.
Baroness Morrissey emphasises the need for self-belief in investing in Britain based on reality rather than a PR campaign, pointing to revelations about low levels of investment in domestic equities by UK asset owners, particularly pension funds. As UK companies increasingly explore opportunities abroad, the London Stock Exchange faces challenges maintaining its historical financial prowess.
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