ARM Holdings, the only major British technological gem, which designs electronic chips, will carry out its IPO on Thursday September 14 at Nasdaq in New York. The company was on the London Stock Exchange until 2016, withdrew when the investment fund Softbank bought it, and chose to return to the Stock Exchange… but by crossing the Atlantic.
Ten days later, on September 25, CRH, a large British construction materials company (75,000 employees), currently listed in London, must switch to the New York Stock Exchange, remaining on the London listing only on a secondary basis.
For years, a trend has greatly worried the British financial center: the London Stock Exchange is no longer attractive. “One of the big changes in my thirty years in the City has been the decline in the importance of the UK stock market, underlined in the Daily Telegraph Tom Stevenson, a chief investment officer at Fidelity International, an et management company. When I started, UK stocks made up 10% of global stock indices. Today, their share is less than 4%. »
The statistics are relentless. In twenty-five years, the number of companies on the London Stock Exchange has fallen by half, from almost three thousand to 1600, notes a report from New Financial, a think tank specializing in finance. The number of IPOs, which was close to three hundred per year between 1997 and 2007, is averaging around a hundred. Money raised this way has increased from 13 billion pounds (15 billion euros) each year to 8.6 billion pounds (10 billion euros).
Small businesses in particular are becoming increasingly rare. But even big companies like ARM don’t hesitate for long. “For technology companies, the American ecosystem is much more developed, which allows them to obtain a better valuation”notes an American investment banker, based in London.
This decline comes primarily from the withdrawal of British pension funds. “In recent decades, layers of well-intentioned regulation have created a culture (…) aimed at eliminating risks and discouraging long-term investments”, explains William Wright, the author of the New Financial report. These rules stem from the crisis in pension funds when the dot-com bubble burst in 2000. Many found themselves in serious deficit, endangering their ability to pay Britons’ pensions.
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