Lloyd’s of London insurer snubs the City with New York IPO plans
A Lloyd’s of London insurer has dealt a fresh blow to the City by snubbing the London Stock Exchange in favour of New York for its planned IPO, piling fresh pressure on the capital’s bourse after it shrank at the fastest pace on record last year.
Aspen Insurance, an underwriting firm which operates out of the Square Mile’s historic insurance market, filed papers last month with US regulators for a potential £3bn float on the New York Stock Exchange, expected to take place in the coming months.
The insurer had previously mooted a New York listing but shelved the plans last year while volatility was still roiling the IPO market.
However, the revival of the plans will be seen as a blow to London after the government and bosses at the London Stock Exchange and City regulator have mounted a push to revive London’s flagging IPO pipeline.
In July, the Financial Conduct Authority pushed through what it called the biggest shake-up of listing rules in 30 years in a bid to tempt more companies onto the public markets.
However, London’s markets shrank at their fastest pace on record last year after a deluge of companies either delisting or agreeing to take-private deals by trade buyers and private equity firms.
Some £52bn worth of companies were taken over last year while just 18 new firms floated across the London Stock Exchange’s main market and junior AIM exchange.
Some of the UK’s biggest listed firms also announced they would ditch their main London listings in favour of foreign exchanges, including takeaway giant Just Eat, Paddy Power owner Flutter, travel group Tui, and equipment rental firm Ashtead.
The London Stock Exchange (LSE) saw 88 companies delist or transfer their primary listing from the main market – the most since 2009, according to data from auditing giant EY.
A number of these firms said declining liquidity and lower valuations were key reasons for moving away from London, particularly to the US which offers more capital and trading activity, EY said.
Other companies such as Watches of Switzerland faced pressure from activist investors to swap their main stock market listing to the US.
Scott McCubbin, EY’s IPO lead for the UK and Ireland, said it had been a “quiet year” for the LSE, adding: “Ongoing geopolitical instability, slow economic growth and a diminished appetite for domestic equities among pension funds have impacted valuations and liquidity.
“We also saw the largest outflow of companies from the main market since the global financial crisis as companies sought access to a deeper pool of investors and the prospect of improved liquidity on other exchanges.”
However, City bosses are hoping to capitalise on relative political stability in the UK this year to tempt more international firms to London.
According to a memo written by a member of the Capital Markets Industry Taskforce, a group of grandees led by London Stock Exchange chief Julia Hoggett, City bosses are looking to position the City as the “adult in the corner of the room” amid political turmoil in the US and Europe.
“The positive narrative is working on the ground with both issuers and investors when you talk to them about listing venue – the pipeline is large and growing,” Mark Austin, the capital markets lawyer and CMIT member, wrote in the note, obtained by Morning Wire.
“The capital cycle is coming and although IPOs are not going to come in the very near future, they are coming, and in numbers, in ’25 and ’26 onwards.“