Postcard from London: International listings could save UK IPO market

Data InsightECM Explorer 2 June

Postcard from London: International listings could save UK IPO market

With the impending listing of a Turkish billionaire family-owned soda ash company on the London Stock Exchange, advisory imagination is turning to other companies with international ownerships potentially eyeing a UK IPO.

This week, We Soda, which is backed by the Ciner Group, announced its intention to launch an initial public offering in London, reportedly eyeing a valuation of USD 7-10bn. After a drought in London listings, the deal is driving positive hope.

Foreign-controlled and overseas companies have boosted the IPO volumes of LSEG since the early 2000s. Powerhouses that have issued their stocks in the UK in the previous decades include among others En+ Group [LSE:ENPL], Glencore PLC [LON:GLEN], Gazprom [GAZP.ME], Rosneft [MCX:ROSN], Kaspi [LSE:KSPI] and Helios Towers [LON:HTWS].

According to Dealogic data, in years like 2006 and 2007, international IPOs in London accounted for a deal value of USD 36bn, way more than the volumes brought in those years by domestic companies. In 2011, foreign and domestic listings in London were balanced at USD 14bn. Overtime, the contribution has somewhat shrunk, although it is still a big component of the issuance, especially when looking at 2017 (USD 6bn in foreign-originated issuance vs USD 8bn in domestic) as well as 2018 (USD 3.2bn vs USD 9bn) and 2019 (USD 2.7bn vs USD 4.8bn).

“For decades we have distinguished ourselves as a great hub for listings due to our reputation as an international financial hub,” one London ECM banker noted. “Arguably now it is harder to attract these companies.”

Brexit put a dent in this reputation, and in the recent years London has lost some of these international deals to Paris and Amsterdam, he noted.

A perception that structural shortcomings are still lingering, combined with the more fragile geopolitical role the UK has had since the split from the EU bloc, have contributed to a notion that the exchange can barely hold on its own domestic companies.

Notably, the case of SoftBank Group Corp [TYO:9984]-controlled chipmaker ARM has become an example of an IPO that has forsaken the UK. Shifting geopolitics has also shifted IPO flows.

Dealogic data shows that Russian companies were London’s main source of foreign IPOs, a cascade of deals that the war in Ukraine ended overnight. It is followed by the United States, whose corporate giants increasingly look at European exchanges when assessing the need for a dual listing. But the world is changing fast, and the growing influence of the Middle East, as well as other emerging countries positioning themselves in the new growth sectors of renewable energy and chipmaking supply chains, could translate into more cross-border listings.

This led one ECM advisor to note that while the issuer nationalities may change in the future, this does not equate to lower volumes. Only last year, Saudi Aramco Oil Co [TADAWUL:2222] studied a potential USD 50bn stake sale (about 2.5% of the company) in London. Meanwhile, Singapore-based Olam Group [SGX:VC2] is still working on a London IPO of its Olam Food Ingredients (OFI) unit despite delays, itself a likely blockbuster multi-billion deal in the making.

The London ECM advisor added that several Asian companies are considering listing profitable assets in the UK between 2024 and 2025, names that are mostly far down the radar of UK officials.

UK Government efforts to improve London’s standing have so far been directed at large-scale structural reforms. But the secret to future success could simply be down to diplomacy.

Did you enjoy this article?

Add the following topics to your interests and we'll recommend articles based on these interests.


Seamlessly connecting banks and investment firms

the Dealogic platform is a single solution that gives you integrated content, analytics, and technology

Get access today