Latest news with #LondonStockExchange
Entrepreneur
4 hours ago
- Business
- Entrepreneur
New wave of Tech IPOs should find their home in London, says Head of Tech Sector at the London Stock Exchange
"Nvidia had $29 million of revenue at IPO, and Amazon had revenues of $16 million at the time they went public. London has all the potential to provide companies with this growth opportunity" says Neil Shah, Head of Tech Primary Markets at the London Stock Exchange. Opinions expressed by Entrepreneur contributors are their own. You're reading Entrepreneur United Kingdom, an international franchise of Entrepreneur Media. Despite comprising only 1.4% of the 503 companies in the S&P 500 index of the largest US-listed businesses, the 'Magnificent 7' (Apple, Microsoft, Amazon, Nvidia, Alphabet, Meta, and Tesla) were responsible for over 50% of the index's total gains - and over 75% of its earnings growth - in 2024. It's sometimes hard to believe how small some of those companies were when they first went public, especially when high profile US IPOs are now reserved for companies with revenues in the billions, not millions. "When I started out in investment banking at Thomas Weisel Partners in 2009," continues Shah, "there were software companies going public in the US with about $40 million in revenue. It is a very different picture today, that would just be impossible. It would probably still be impossible at $400 million in revenue. $400m of revenue a quarter, maybe, but not annually." But it is still possible in London. This may come as a surprise to the average Brit who may only come across the London Stock Exchange in the evening news summary of the FTSE 100 with its big banks, big pharma and miners. The London Stock Exchange team gets as excited about early stage growth companies as they do about unicorns. Most stock exchanges have left the messy business of young, growing scale ups to VCs or Private Equity. Not so in London. "AIM turns 30 this year. It is the world's most successful growth market and is run by the London Stock Exchange. Nominated advisers closely support companies not only through the IPO process, but thereafter. And some of the work required by a company to go public could potentially be done at a tenth of the cost of a US listing." "When companies choose to list in London, they can benefit from a full-time fundraising team in the form of the house broker retained by the company, meaning there is less of a burden on a company founder. And as public companies, they can also attract and incentivise talent in a liquid, transparent way that private companies cannot." Shah also believes that (along with a range of high-quality small cap funds and investors) Venture Capital Trusts, or VCTs - a unique British invention that combines the best of a Silicon Valley VC and a traditional small cap fund - offer an attractive alternative to more fashionable venture funding sources. The traditional venture capital model has fueled household name successes like Uber, Facebook and Zoom. But it has also given the world high profile failures like WeWork, Theranos and 23andMe. London's approach, where sensible valuations, supportive institutional investors and quality growth companies mingle, could be having its moment. AIM has supported some fantastic founder-led companies such as Craneware which went public with $15m of revenue in 2007 ($200m today) and Cerillion, which went public in 2016 with £14m of revenue and a £22m market cap. Today, it's worth over £450m. Nvidia founder Jensen Huang took to the stage at London Tech Week in mid June, saying "The UK has one of the richest AI communities anywhere on the planet... and the third largest AI capital investment of anywhere in the world." If Huang or Bezos were taking Nvidia or Amazon public today, they may be looking to the City, not Wall Street, for support. "British investors are really well-travelled. More than a third of our [London-listed] companies are international," says Shah. "It doesn't matter where you're from, you can be successful here."
The Independent
2 days ago
- Business
- The Independent
Aim boss makes plea to boost market's appeal after inheritance tax blow
The boss of London's junior stock market has called on the Government to help halt an exodus of companies listed in the City as he warned over the impact of its move to cut inheritance tax relief on Aim shares. Marcus Stuttard, head of Aim and UK primary markets at the London Stock Exchange, urged the Government to reinstate 'financial incentives' for Aim investors after last autumn's Budget revealed plans to slash inheritance tax (IHT) relief on Aim-listed stock from 100% to 50% from April next year. Aim has suffered a raft of firms quitting the market in recent years as part of a wider shift away from London towards overseas rivals and as firms are bought out by foreign competitors or taken private. More than 60 firms – with a market cap of over £12 billion – have already announced plans to leave Aim in 2025 as they look to move to the main market, delist or are bought out. As Aim celebrates its 30th anniversary on Thursday, Mr Stuttard told the PA news agency that the Government can help stop the outflow of firms on London's beleaguered market, with 'more companies leaving than joining in the last two years'. He said the cut to IHT relief was a major blow. 'One hundred per cent relief has been and used to be really important to Aim,' he said. 'We are calling on the Government to make sure there's certainty… with financial incentives to support Aim.' He also backed Government plans to increase pension fund investment in UK stocks, saying it was crucial that 'domestic investors back our domestic economy'. He told PA: 'International investors understand the quality of our small businesses – we need our own pension funds to be backing that opportunity. 'It's vital that our UK pension funds back the UK economy.' The Aim – or Alternative Investment Market – was launched in June 1995 to give small and medium-sized firms access to capital. In the 30 years since, it has admitted more than 4,000 companies and raised over £136 billion. There were about 1,700 businesses listed on Aim in 2007, but this has dwindled to fewer than 700. Some of this is down to costs of listing and onerous rules and regulations. Mr Stuttard said the group is working on a discussion paper to ask firms how Aim could change and evolve and what are the current downsides of listing on the market. He said 'nothing is off the table' in terms of what could be looked at, with the market keen to see the consensus for a way forward. He said it is clear there is still a strong need for Aim to help companies get access to capital to grow without resorting to selling. 'From start-up to initial public offering (IPO) to big global business, we want to provide companies with a range of choice of financing options so they don't get sold too early,' according to Mr Stuttard. 'Aim is a really important part of the UK economy and the UK capital markets,' he added.
Yahoo
2 days ago
- Business
- Yahoo
London Seeks More Chinese Listings as City Battles IPO Drought
(Bloomberg) -- London is seeking to attract more Chinese firms to list on its stock exchange as the city struggles with a shrinking equity market and a deal drought across Europe. Security Concerns Hit Some of the World's 'Most Livable Cities' JFK AirTrain Cuts Fares 50% This Summer to Lure Riders Off Roads Taser-Maker Axon Triggers a NIMBY Backlash in its Hometown How E-Scooters Conquered (Most of) Europe NYC Congestion Toll Cuts Manhattan Gridlock by 25%, RPA Reports 'We need to get more IPOs happening in London,' Chris Hayward, policy chairman of the City of London Corp., said in an interview from Shanghai. 'We don't want to lose business across the Atlantic.' The authority for London's Square Mile financial district can provide opportunities for Chinese firms to secure customers and funding in the UK and drive them to list in the city via its connect scheme with Shanghai, Hayward said. The city can also encourage UK firms to raise capital and list on the Shanghai Stock Exchange, he said. China introduced its stock connect program with the UK in 2019, allowing listed companies to issue depository receipts on each other's exchanges. It later expanded the program to include Switzerland and Germany. Six years later, only a handful of Chinese firms, including Huatai Securities Co., have listed in London, raising a total $6.6 billion, and trading has been muted. Beijing and London vowed early this year to deepen economic and financial ties, promising efforts to boost the China-UK stock connect. 'You've got to proactively go out there and encourage listings on your exchange,' said Hayward, drawing lessons from Hong Kong's success in igniting a boom in initial public offerings in the first half of this year. Hayward, who was in Shanghai this week for China's annual financial Lujiazui forum, is traveling to Hong Kong later in the week for IPO discussions. Hong Kong's share-sale bonanza this year saw new listings and additional offerings fetch more than $27 billion as of early June. That eclipsed annual totals in the last three years, and is the most since records were reached in 2021, according to data compiled by Bloomberg. The London bourse, on the other hand, has had just four pending or trading IPOs this year, as its valuation discount to the rest of the world discourages firms. London, as a key offshore yuan center, has also worked with China's central bank to help promote the internationalization of its currency. London established a working group with the People's Bank of China in 2018 to monitor the yuan market in the UK capital. The authority has been pushing global asset managers in the city to issue new products in yuan to facilitate greater use of the currency, said Hayward. He downplayed the potential impact that UK's recent tax for wealthy non-domiciled residents and its immigration crackdown could have on London's appeal as a global financial center, while urging efforts to resolve the non-dom issue. 'I would encourage the government to continue to review this matter,' he said. 'It's important to us to try and keep wealth creators in this country.' Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? The US Has More Copper Than China But No Way to Refine All of It How a Tiny Middleman Could Access Two-Factor Login Codes From Tech Giants Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump? ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Scotsman
3 days ago
- Business
- Scotsman
Does it still make sense to invest in AIM 30 years on?
There were high hopes when London's Alternative Investment Market was set up, so how is it doing? Adrian Murphy reveals all Sign up to our Scotsman Money newsletter, covering all you need to know to help manage your money. Sign up Thank you for signing up! Did you know with a Digital Subscription to The Scotsman, you can get unlimited access to the website including our premium content, as well as benefiting from fewer ads, loyalty rewards and much more. Learn More Sorry, there seem to be some issues. Please try again later. Submitting... The world was a very different place when London's Alternative Investment Market (AIM) launched during June, 1995. Perhaps, then, it should be no surprise that three decades on there are legitimate questions over its future viability and its suitability as an investment proposition. Originally conceived as a sub-market of the London Stock Exchange, AIM's main purpose was to provide smaller, potentially high-growth companies with access to capital without the cost and regulatory requirements attached to listing on the main market. Later, AIM shares were given 100% exemption from inheritance tax (IHT) provided they were held for two years, in a bid to incentivise investors. Advertisement Hide Ad Advertisement Hide Ad But, it is difficult to say AIM has been a massive success on either front – particularly with the IHT relief being reduced to 50% from April next year. While the likes of Ladbrokes owner Entain have graduated to the main market over the years, the number of companies doing likewise has been diminishing. And AIM itself has been shrinking – the index had nearly 1,700 constituents at its peak, but today that has fewer than 700. AIM was conceived as a sub-market of the London Stock Exchange (Picture: Henry Nicholls/AFP via Getty Images) From an investment perspective, returns have also been poor – the FTSE AIM 100 sits far below its 2007 and 2021 peaks, and has delivered paltry returns over most timeframes. This has all but negated the IHT benefits offered to investors – in the majority of cases, you would have been better off investing elsewhere for a better return and paying any IHT due. Part of the reason for these performance issues is the profile of the companies on AIM. Their size has meant that trading isn't necessarily daily, leading to liquidity issues and the lower barrier to entry inevitably makes them riskier investments – in turn, rendering many unsuitable for the average investor and even less so for those in later life. Equally, investing in AIM means taking a highly concentrated bet on the UK. Combined, all UK indices account for just 3% of the global market – and the FTSE All Share represents that vast majority of that figure. Advertisement Hide Ad Advertisement Hide Ad While small-cap companies have tended to outperform their larger peers over the long term, there are other fund and ETF options which can provide that type of exposure without the risks that come with AIM – whether specifically in the UK or globally. Even the FTSE Small Cap could prove a more suitable choice, with superior historical returns – although these are no guide to future performance – and more diligence over the companies of which it comprises. There are more sustainable alternatives to AIM, says Adrian Murphy For investors with an eye on passing down wealth, capital preservation and income should be front of mind. And there are businesses that invest in infrastructure, renewable energy, and smart metering that may not have the allure of fast-growing companies, but have similar tax advantages and provide stable levels of income without the downside risk. If you're investing with IHT in mind, there are more sustainable alternatives to AIM. Weigh up your options and remember that the tax tail shouldn't wave the investment dog – don't let the opportunity to reduce a tax bill sway you away from a more suitable choice for your circumstances, which would ultimately more than likely deliver better post-tax returns in the long term.
The National
3 days ago
- Business
- The National
City of London loses its lustre just as foreign investors queue for UK
Here is a funny thing. The rest of the world rates Britain higher than the Brits. So says Steven Fine, chief executive of City broker Peel Hunt. Flotations of homegrown companies have reduced to a trickle in London. Meanwhile, many firms that are here, especially in tech, are heading elsewhere, usually to New York. This as the government insists the UK is the go-to, happening place. And, as Fine says: "Domestic self-esteem is quite low." Yet, "we are seeing a rotation out of US assets into Europe and greater institutional positivity towards the UK." This week, the Economic Secretary to the Treasury, Emma Reynolds, will mark the 30th anniversary of the AIM junior market with a speech at the London Stock Exchange billed as "reinforcing the UK's position as a global hub for investment and innovation". Her address comes as London is dealt a fresh blow by the decision of Wise, the money transfer business, to move its primary listing to New York. Four years ago, it was so different. Then, Wise provided a boost by choosing to float its shares in London. As a FinTech operator, Wise's £9 billion ($12.15 billion) IPO was hailed as signalling UK pre-eminence in a tough European and global arena. Today worth £11 billion, Wise is off, joining the 30 companies to have quit the London exchange this year. Last week as well, two high-flying UK tech operators, Spectris and Alphawave, went private, their takeovers resulting in a £5.5 billion loss of market value, not to mention the trading volume that will also vanish. Another slap comes with Assura rejecting a UK merger offer that would have doubled its size and kept it on the London market. Instead, the £1.6 billion GP surgeries operator agreed to be bought by US private equity giant KKR. So far, by return, this year there has been only one flotation, that of UK accountancy firm MHA, on Aim. No wonder the likes of Fine are fed up. While some point to the lack of flotations being a European, even global problem, with the US tally of listed companies 40 per cent lower than in the late 1990s, it does not negate the fact that London is faring worse. Nor does it alleviate the damage caused by the exits and absence of substitutes – not just to the stock market and prestige, but to the underlying support system of broking firms like Fine's, banks, lawyers, accountants. Income, jobs and tax receipts are suffering. It's not as if UK businesses are bad and the country is a poor place in which to invest – KKR's purchase of Assura, for one, indicates otherwise. As does the reported interest of Australian infrastructure investor Macquarie in acquiring stakes in London City, Birmingham and Bristol airports. No, it is more that being listed is not as attractive as it once was and other exchanges have greater appeal. What's to be done? Fine argues the problem lies with UK pension funds shunning their home market. The government makes noises they will be forced to fly the flag but it remains a threat, nothing more. Pressure has been brought to bear via the Mansion House accords to encourage them to back UK infrastructure and private equity but it has ignored UK publicly listed shares. UK pension funds put less of people's retirement money into their own country's PLC than their foreign equivalents – US, Canada and Australian funds support businesses in their backyards to a much greater extent. The government is unwilling to crack the whip for fear of being seen to interfere in what has been historically perceived as a free market. Equally, though, those funds enjoy tax breaks amounting to £49 billion a year. There is a strong case for saying they cannot have it both ways. Similarly, ISAs are tax-free but there is no obligation for them to invest in UK shares. Mark Slater, who runs the fund manager, Slater Investments, has questioned why. "You don't want government to tell people where to invest, ideally. But I think you can say if money is tax-advantaged, in other words the government's giving you money, then they have a right to tell you the terms on which you get that benefit. "If people want to own Apple, they can still own Apple, they just can't do it through an Isa. Why should the British government seek to lower the cost of capital of Apple?" Requiring them to "buy British" in exchange for public money smacks of MAGA ideology and has not been taken up by the government. There is an added complication, raised by lawyers, which is the definition of a UK business. In today's interlinked, internationalised world, it is not so clear-cut. There is the familiar issue, too, of the Treasury being reluctant to forego a nice little earner. At present, share purchases in London attract 0.5 per cent stamp duty, a levy that does not apply elsewhere, not least in the US. It creates the anomaly highlighted by the Capital Markets Industry Taskforce, intended to lift the City, that investors are taxed "when buying a UK-listed Aston Martin share but not when buying a German-listed Porsche share or US-listed Tesla share". But that oddity also brought in £3.2 billion in 2023-2024 and this is a financially strapped administration. London's listing rules could be less doctrinaire and not so expensive to obey. The reason Wise chose to depart is that New York allows dual-class shares – some shares carry greater voting rights than others. London does not. That is what Wise meant when it alluded to the US listing as having "a structure that aligns with US market practices including those of our US-listed tech peers, which we believe allows us to remain laser-focused on delivering our mission". Wise founder Kristo Kaarmann will have 18 per cent of the shares but 50 per cent of the votes. In its desire to be "pure", to maintain tradition, London, as with the government's reluctance to require pension funds to invest, is shooting itself in the foot. Investor equality free of government intervention may be the UK way but it is not copied elsewhere. If the UK wishes to stop the rot, it may have to change.
