London listings fade as UK giants flock to Wall Street: Marc Rubinstein

Key topic:UK firms shift listings to US for better valuations and deeper marketsLSE's revenue now dominated by data, not stock trading or listingsUS tax proposals may accelerate London's corporate listing exodus.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.The auditorium doors will open for BNIC#2 on 10 September 2025 in Hermanus. For more information and tickets, click here..By Marc Rubinstein.Back in 2016, Intercontinental Exchange Inc., the owner of the New York Stock Exchange, revealed that it was considering an offer for the London Stock Exchange Group Plc. After a couple of months of due diligence, it walked away, citing “insufficient engagement” by the LSE. A decade earlier, Nasdaq was given the cold shoulder from management that saw London as “the natural center of the world’s equity flows.”As it turns out, the American exchanges didn’t need to buy LSE to win London’s market – they just needed patience. US markets are steadily picking off London’s prized listings one by one, exemplified by fintech pioneer Wise Plc’s recent decision to shift its primary listing to New York. Wise, worth about $15 billion, adds to a growing list of departures. Construction-equipment firm Ashtead Group Plc announced its move in December, while former FTSE 100 constituents CRH Plc, Ferguson Enterprises Inc and Flutter Entertainment Plc have already relocated.None of this is lost on the London Stock Exchange. Under former Goldman Sachs Group Inc. banker David Schwimmer, it turned itself into a data and analytics business through its acquisition of Refinitiv in 2019. Share listings and trading accounted for less than 3% of firmwide revenue in 2024; data and analytics, indices and risk intelligence contributed 66%. The irony is that LSE Group trades at a discount to US-listed peers in the information-services sector. With US revenue having tripled to 38% today from 12% in 2016, and half its shareholders now American, the company would be a prime candidate for a Wall Street listing – if it weren’t the London Stock Exchange itself.The reasons for this westward migration are multiple and mounting. For some companies, it’s about strategic presence in the world’s largest economy: Ashtead generates 92% of its sales in North America, while Wise sees the US as crucial for expansion, citing 4,000 potential bank clients for its payments platform. Others are drawn by Wall Street’s superior valuations – a stark reversal from 2006 when LSE boasted of London’s “lowest cost of capital” in its efforts to thwart Nasdaq. Today, UK stocks trade at a 42% discount to US peers on forward earnings, or 25% after adjusting for sector mix, according to data from Goldman Sachs. Then, there’s liquidity. Wise specifically highlighted “better access to the world’s deepest and most liquid capital market” as a key driver of its decision.Wise conducted its planning before Donald Trump’s “One Big Beautiful Bill Act” was filed in Congress. But Section 899 of the bill serves to validate management’s decision and may accelerate the exodus. The provision introduces retaliatory taxes against non-US corporations that are majority foreign-owned, incentivising companies to increase their US shareholder base – something a Wall Street listing would facilitate. While implementation of the tax depends on foreign governments’ policy response, it is one more factor that may prompt companies to reconsider their listing venue. Wise’s shareholder base is already US-centric, but companies such as Pearson Plc and Experian Plc have US ownership below 50% alongside high US sales exposure. It would be no surprise if their boards are monitoring Wise’s maneuvering closely.The exodus is particularly acute in Britain’s technology sector, where the absence of major listings has become self-perpetuating. When artificial intelligence pioneer DeepMind was acquired by Google in 2014, or when chip designer ARM Holdings Plc sold to SoftBank Group in 2016, these weren’t just individual corporate decisions – they shook the entire ecosystem. The UK has demonstrated it can produce innovative companies, but it struggles to retain them, partly due to the scarcity of domestic tech investors and comparable peers. In a thriving London, ARM would be a top-five listed company by market cap, and who knows what DeepMind would be worth – it sold itself pre-revenue, yet its last reported accounts (2023) show £1.5 billion ($2 billion) of turnover.This dearth of major tech listings reflects a broader crisis of domestic investment. While recent data on fund flows show European investors returning to their domestic equity markets, UK institutions remain conspicuously absent. Even when British pension funds do allocate to equities, the vast majority flows abroad – defined contribution funds put 70% into international stocks and just 6% into UK shares. Foreign investors are stepping in, attracted by the valuation gap, but their opportunistic buying can’t fully offset the structural weakness of domestic demand.Policymakers have studied various options to turn the tide. The Conservative government proposed a UK-oriented fund for individual investors, though the current Labour administration hasn't adopted it. Higher UK allocation targets for pension funds have also been suggested. Yet these initiatives face a critical challenge: As attractive UK-listed opportunities vanish, reforms may arrive too late to reverse the trend. As for the LSEG itself, it confronts the same American-sized temptation as Wise – but changing venue isn't quite so simple when you are the venue..© 2025 Bloomberg L.P.

London listings fade as UK giants flock to Wall Street: Marc Rubinstein

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