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The London Stock Exchange has had a disappointing few years. It has not made any major IPOs since Deliveroo’s exit. disastrous 2021 floating. Investors and market bosses have also been disappointed by a series of snubs and reversals, including that of former British tech star Arm’s. decision list in New York and the Turkish mining company WE Soda last minute retirement, both in 2023.
So, with some caution, many in the City have welcomed reports of three companies that look set to list in London. Raspberry Pi, the British microcomputer manufacturer, has confirmed a listing with an expected valuation of up to £540m. Singapore-based Chinese fast fashion conglomerate Shein is understood to be planning a listing in London and has reportedly been courted by Labor and the Conservatives. Anglo American is also said to be considering an initial public offering of De Beers, the South African diamond giant, through the London market as part of a radical restructuring plan.
While all of this would be a boost for the London market, it is not a perfect reopening. In the “vibes”-based IPO market, the company that tests the slow trade will set the tone for the next ones. In an ideal world, the IPO of a local tech star or profit giant would have ushered in a new era. The Raspberry Pi doesn’t exactly fit the bill, with a modest valuation and products that have limited use beyond students and hobbyists.
For Shein, by far the oldest of the three, London was not her first choice. Rather, her previous attempt to list in New York was apparently rebuffed by anti-China sentiment. Her brilliance is further dimmed by accusations of forced labor, and it remains possible that the Chinese Communist Party could revoke its blessing. Market reactions to De Beers could also vary, given its complex relationships with the Botswana government and questions about the sustainability of its business model.
However, this is the real world, not one in which illusions alone can create a British technology giant. The Raspberry Pi and Shein IPOs should be celebrated. Market authorities and advisors should dedicate themselves to ensuring that their prices reach the goal. De Beers’ listing is also worth encouraging, provided its sellers can address the fundamentals of its business.
The London market is currently experiencing unusually good feelings and successful listings could underpin the positive mood. With a FTSE on the rise and an avalanche of opportunities for investors to obtain shares through so-called tracking transactionsInvestors are waking up to the fact that underowned London companies are worth more than their current valuations.
The next government should build on the momentum to foster a better fundraising environment. The recommendations of the hill review action should be taken with greater urgency. A industrial policy investing more in critical technologies and removing impediments to new businesses would support the future supply of publicly traded companies. Reviewing Stamp duty could stimulate additional demand for UK shares and better financial education Education could help create new generations of local capital investors.
However, regulators should be careful that the push for more listings does not detract from LSEG’s strengths. While Shein’s move across the pond may make London appear less strict than New York, London maintains world-class transparency standards. Regulators should not give in to the temptation to lower those standards to attract more listings. Doing so would jeopardize the London market’s historic role as a place where emerging market companies, like Shein, go to demonstrate their international bona fides.