London Executives Call for Governance, Pensions Revamp to Lure More IPOs

(Bloomberg) — The British government should prioritize streamlining corporate governance requirements and encouraging pension funds to invest in local stocks to boost the appeal of the UK’s capital markets, a survey finds.

Regulation is another focus that emerged from the survey of more than 150 executives and directors at London-listed companies by broker Deutsche Numis, which is scheduled for release on Tuesday.

“The previous Conservative government and the newly-elected Labour government have both put remedying this situation at the top of their agendas, but FTSE leaders require more reassurance as to whether significant change is imminent,” Numis said in its release, which was shared with Bloomberg News.

Separately, respondents to the survey — which was conducted around the time of July’s general election — cited executive compensation as key to attracting more initial public offerings to London, with 43% calling for a more competitive pay environment, up from 38% the year before.

Research suggests that while median chief executive officer pay in the UK capital is on the rise, it continues to be outpaced by New York. Experts say the country’s pay culture is starting to change, with companies more willing to risk investor dissent to attract and retain talent.

Some 87% of those polled by Numis said the UK is an attractive market to list or raise capital, with almost all respondents agreeing that recent reforms by the Financial Conduct Authority will make London “significantly more attractive”. Among other changes, the FCA at the end of July made it easier for foreign issuers to list in London.

“Only 1% of respondents strongly disagreed with the view that London is competitive, and that’s actually pretty encouraging,” Ross Mitchinson, co-CEO of Deutsche Numis, said in an interview.

London has been battling with a dearth of IPOs in the past couple of years, combined with a string of departures of locally listed companies to New York.

However, the picture might change, with 42% of respondents to the survey expecting IPOs to increase “dramatically” over the next 24 months and 92% anticipating more foreign issuers to list in London.

“We’re not expecting a significant number of UK IPOs in the fourth quarter, but people are expecting things to pick up in 2025,” said James Taylor, co-head of investment banking at Deutsche Numis. “There are tangible discussions taking place with private equity and international businesses that find London more attractive following the new listing rules.”

Among those considering a London listing are Vivendi SE unit Canal and Greece’s Metlen Energy & Metals. Liverpool-based sports nutrition group Applied Nutrition is also planning a domestic float. 

But, the question remains how much room there is for London to become more appealing to investors, with only 16% of respondents confident that the British capital can “dramatically” up its game, down from 41% a year ago, according to the survey.

“The positive outlook clearly remains but where we have seen a drop in optimism, this is likely due to FTSE leaders believing the trend of London’s outlook improving has reached its peak,” Numis said in its report.

More stories like this are available on bloomberg.com