London’s stock market is experiencing a surge in share sales, despite a noticeable slowdown in new listings. This year, the volume of follow-on transactions—where investors in listed companies sell substantial portions of their stock—has hit $11.5 billion by late May. This marks the fastest start since 2021, encompassing 110 such deals, according to data from the London Stock Exchange Group (LSEG).
In stark contrast, initial public offerings (IPOs) in London have garnered only about $148 million across four minor deals so far this year. Despite this, London has emerged as the most active exchange in Europe when considering both primary and secondary transactions.
“London stands head and shoulders above other markets so far this year in terms of volume of equity placed—without completing one major IPO yet,” remarked Andreas Bernstorff, head of Europe, Middle East, and Africa equity capital markets at BNP Paribas.
The robust demand for fundraising is driven by the FTSE 100 reaching record highs. Factors contributing to this rise include cooling domestic inflation, global economic growth, and investor optimism that soaring commodity prices will bolster earnings for resource companies. Over the past three months, the FTSE 100 has climbed 7.6%, outperforming the S&P 500, Nasdaq Composite, and Stoxx Europe 600.
London has raised $11.6 billion in total proceeds this year, surpassing the French and German exchanges, which each raised under $5 billion, and Amsterdam, which raised $2.5 billion. However, these figures are still dwarfed by the US markets, where the New York Stock Exchange and Nasdaq each exceeded $34 billion in proceeds.
Many companies and investors are cashing in on non-core holdings, including shareholders of the LSEG itself. A consortium of investors has been gradually divesting billions of pounds worth of LSEG shares acquired during its $27 billion purchase of Refinitiv in 2021. In mid-May, this group, including private equity firm Blackstone, sold a block of shares representing about 3% of the company, nearly $2 billion, at a premium—a rare occurrence in block trades.
Other significant transactions include sales of shares in consumer health group Haleon by GSK and Pfizer. “On the back of a strong bid from investors for high-quality assets and the strong performance of blocks last year, this has turned out to be a unique window where large, strategic blocks held for many years have come loose,” noted Aloke Gupte, co-head of international equity capital markets at JPMorgan.
The total equity issuance in London this year does not account for National Grid’s planned £7 billion raise to strengthen its electricity networks in the US and UK.
Despite the buoyant conditions in follow-on transactions, the London market continues to struggle with attracting IPOs. Raspberry Pi, a maker of tiny computers, is expected to go public next month, though the fundraising is anticipated to be modest. In contrast, larger transactions like the Swiss IPO of skincare company Galderma and the Amsterdam listing of private equity group CVC have occurred elsewhere in Europe.
This resurgence follows a rush of IPOs during the pandemic, driven by low interest rates. However, some of those listings, such as Deliveroo and bootmaker Dr Martens, have since underperformed. “We are in the early stages of a European IPO recovery—it hasn’t arrived in the UK yet—but that’s just a question of time and fading memories of a disastrous 2021 vintage,” Bernstorff added.
