The stock market is shrinking at its fastest rate in more than a decade, the business news agency reports
The number of companies listed on the London Stock Exchange (LSE) is decreasing at the quickest pace in more than ten years as a result of mergers and acquisitions by larger competitors and investment firms, Bloomberg has reported, citing data compiled by the outlet.
In 2024, some 45 firms reportedly delisted from the London stock market, representing an increase of 10% compared to the whole of last year. It’s the highest number of companies to leave the exchange since 2010. At the same time, the volume of deals targeting UK corporations have soared 81% this year to more than $160 billion.
Data tracked by the news agency also shows that only 11 companies have completed IPOs in London during the current year to raise a total of $1 billion, down 11% from the amount raised during the same period in 2023.
“Unless the UK gets its act together, it’s going to continue to lose ground and relevance,” Liad Meidar, managing partner at investment firm Gatemore Capital Management, told Bloomberg. “Quite simply, companies can’t get the right cost of capital. They can’t get the valuation they want.”
Overseas private equity firms have been particularly active when it comes to mergers and acquisitions, the news agency noted. In November, Florida-based Starwood Capital Group completed the $852 million takeover of London-listed Balanced Commercial Property Trust last month. Sweden’s EQT recently closed the $2.7 billion acquisition of videogame services company Keywords Studios, while Chicago-based Thoma Bravo purchased cybersecurity software provider Darktrace for $5.3 billion.
The media outlet noted that more new deals were expected to come in the near future. Chief executive officer of UK-based insurance giant Aviva, Amanda Blanc, is reportedly trying to convince the board of the rival Direct Line Insurance Group to engage after making a $4.2 billion takeover bid. At the same time, US investment major General Atlantic has announced plans to acquire online training business Learning Technologies Group for $1 billion.
The UK stock market remains popular with bargain hunters, Bloomberg said, noting that British equities are currently trading at a record discount of over 40% compared to peers globally.
“If London wants to keep its place as the financial center of Europe, major reforms are needed,” said Joachim Klement, a strategist at British advisory firm Panmure Liberum, as quoted by the agency. “It is time for UK investment banks, the London Stock Exchange, and regulators to realize the seriousness of the situation and take action. Unfortunately, there are no easy fixes.”
