As political unrest continues to ripple through France and geopolitical tensions between China and the United States escalate, the City of London is emerging as a beacon of stability and opportunity for international firms contemplating initial public offerings (IPOs). This shift in dynamics is being highlighted by Mark Austin, a prominent lawyer at Latham & Watkins, who has played a pivotal role in spearheading reform efforts within the City over the past two years.
In recent discussions, Austin noted a significant increase in inquiries from companies that are reevaluating their options for listing. Many are questioning whether Continental Europe remains a viable location for their business listings amid the current turmoil. He emphasized that businesses are looking for alternatives, and the UK is starting to be recognized as a well-regulated and independent financial center.
“There is a sense that the UK is starting to establish itself as an independent financial centre, well-regulated, with a favorable time zone,” Austin stated during an interview on the BBC’s Today programme. He pointed to CK Infrastructure, which opted to list in August shortly after changes to the Financial Conduct Authority’s (FCA) listings rules, as indicative of this trend. The company sought to avoid sole exposure to the Asian market, highlighting a growing preference for London among international businesses.
Austin’s insights resonate with a broader memo he has circulated among key stakeholders, including the Treasury, FCA, and members of the Capital Markets Industry Taskforce (CMIT), which is led by Julia Hoggett, the CEO of the London Stock Exchange. In this memo, Austin describes the City of London as “the adult in the corner of the room,” suggesting that it is gaining traction as a preferred location for listings amidst the chaos affecting European markets.
Concerns over the stability of French markets are mounting, particularly as the French government grapples with potential collapse due to backlash against controversial budget measures. This instability has further fueled the narrative that London could be a safer and more appealing option for companies considering an IPO.
CMIT, which includes notable figures such as Sir Nicholas Lyons, CEO of Phoenix, and Sir Jonathan Symonds, chair of GSK, has been advocating for public markets reform in London. Over the past two years, the group has lobbied the UK government to ease pension rules and attract more domestic capital into the market. Additionally, they have called for a streamlined rulebook for companies looking to list on the London Stock Exchange.
A significant step in this direction occurred in July when the FCA implemented a comprehensive overhaul of its listing regulations, described as the most substantial change in three decades. This reform was partly influenced by the experiences of companies like Arm, which chose to list in New York rather than London, citing regulatory challenges as a factor in their decision.
Looking ahead, Austin believes that the UK stands to gain from a period of relative political stability, particularly in comparison to European markets. He anticipates that this stability will persist for at least the next five years, especially following the election of right-wing leaders in various European countries.
This evolving landscape is not only beneficial for the City of London but also signifies a potential shift in the global financial ecosystem, as businesses increasingly seek out environments that offer regulatory clarity and stability. As the City positions itself as a prime destination for international IPOs, it may well become a pivotal player in shaping the future of global finance.
In summary, the combination of political instability in France, the ongoing tensions between major world powers, and the proactive reforms being undertaken by the City of London has created a unique opportunity for the UK to attract international firms. With a growing pipeline of companies considering London for their listings, the City is poised to reinforce its status as a leading financial hub in a rapidly changing global landscape.
