London Stock Exchange Sees Revival in IPOs Amidst Calls for Tax Reforms

What's Happening?

The London Stock Exchange is witnessing a resurgence in initial public offerings (IPOs) with three significant announcements in recent days. Shawbrook, a bank specializing in buy-to-let mortgages and small business lending, is set to return to the market with a valuation of approximately £2 billion. This follows its removal from the market in 2017 by private equity firms BC Partners and Pollen Street. Additionally, Beauty Tech Group and Princes, a food business, have also announced their IPOs, valued at £300 million and £1.5 billion respectively. Despite these developments, the market still lacks large-scale listings, as seen with SoftBank's decision to list Arm Holdings on the US Nasdaq in 2023. The potential listing of Visma, a Norwegian software company, in London could mark a significant win for the exchange.

Why It's Important?

The revival of IPOs on the London Stock Exchange is crucial for maintaining its competitiveness in the global financial market. The recent announcements signal a positive shift, yet the absence of major listings highlights ongoing challenges. The decision by companies like SoftBank to list elsewhere underscores the need for reforms to attract larger, international firms. The UK's current 0.5% charge on share purchases is seen as a deterrent, and there are calls for Chancellor Rachel Reeves to consider tax reforms to enhance London's appeal as a listing destination. A reduction in this charge could stimulate more activity and attract a diverse range of companies, bolstering the exchange's status.

What's Next?

Chancellor Rachel Reeves is reportedly considering a three-year tax holiday for new listings, which could provide a temporary boost to the market. However, industry experts argue that a broader reduction in the share purchase tax would be more effective in sustaining long-term growth. The potential listing of Visma in London is being closely watched, as it could set a precedent for other large companies considering their listing options. The outcome of these decisions will likely influence London's ability to compete with other major financial centers like New York and Amsterdam.