Listing in London is just not very attractive, and the government’s schmoozing won’t change that
Matthew Lynn City columnist
It has been yet another terrible couple of weeks for the City as a centre for equity trading. The FTSE 100 might be hitting record highs, but all it is doing is finally catching up with some of the other major indices around the world. The problem is that companies keep leaving. Anglo-American has received a takeover bid from BHP, which if accepted would mean another major FTSE-100 company exiting the market. Mike Lynch’s Darktrace announced it was to be taken over by private-equity firm Thoma Bravo.
Over the last couple of months the pharma business e-therapeutics quit, with its CEO Ali Mortazavi complaining that the market was “completely broken; CRH, Ferguson and Tui have also departed. The listing in London of the Greek industrials conglomerate Mytilineos, a rare move in the other direction announced last week, hardly makes up for the losses. With companies leaving at an accelerating rate, and virtually no fresh listings, there are real fears the London equity market may disappear.
Hunt’s big idea
Against that backdrop, it’s not surprising chancellor Jeremy Hunt wants to find a way to halt the exodus. Hunt’s big idea is to host a summit at his official country residence, schmooze many of the UK’s fastest-growing companies, and try to persuade them to float on the London market. With a focus on fintech and biotech, sectors where the UK has plenty of promising start-ups are being prioritised, with the likes of Monzo and Starling Bank on the list of those invited. But given that the government is hitting all-time record lows in opinion polls, it is probably a mistake for Hunt to overestimate his persuasiveness. When he starts talking, most people switch off. Rishi Sunak’s government is unlikely to survive the looming general election, and not many growing businesses will feel they need to cosy up to politicians on their way out.
There are two other big problems with Hunt’s initiative. Firstly, the government shouldn’t be trying to hustle companies into one capital structure or another. One of the reasons the equity market has declined so significantly is that there are many other ways for companies to raise capital, or to diversify their ownership base, or to allow founders to cash out all or part of their stake, without al
