The London stock market is facing a crunch in the next few days.
Fintech company Wise has announced it is moving its main listing to New York and takeover deadlines are looming for several other British tech starlets.
The prospect they will be snatched off by foreign bidders augurs badly for the City.
US giant Qualcomm has been given a deadline of later today to table a formal bid for Leeds-based Alphawave, whose designs for chips that allow the high speed transfer of data have created excitement in AI circles.
US private equity barons are stalking two other British tech firms: GlobalData, a business information company, and health tech firm Craneware. Both have ‘put up or shut up’ deadlines this week.
The prospect of losing these companies is dispiriting, but the tone was set when Cambridge (UK) chip designer Arm chose to list its shares in New York, rather than London. We lost another tech star when cybersecurity company Darktrace was taken over by US private equity barons Thoma Bravo last year.
Shifting the narrative: Getting rid of stamp duty on share deals would be a great move
It’s not just tech either. Metals investor Cobalt Holdings has ditched plans to list in London and drug maker Indivior has jettisoned its secondary City share quote, having moved its main listing to New York last year.
The perception that listing in New York is a panacea is dubious.
The data shows most European companies that move there find their shares perform worse. But the narrative has become so ingrained, the facts don’t seem to matter.
Speaking of which, the Trump chaos ought to be an opportunity for the City to attract firms to list their shares here and avoid the President’s mercurial behaviour and tariff mayhem. Even former ‘First Buddy’, Tesla chief Elon Musk, is getting cold feet on The Donald and, even under the current Labour Government, the UK looks comparatively stable. It is not all one way traffic.
Valterra Platinum, an £8billion spin-off from Anglo-American, has just made its debut in the City, though it has a main listing in Johannesburg. The evocatively-named Rosebank is also flying a flag. Rosebank is the new corporate vehicle for lawyer-turned-industrialist Simon Peckham and his colleagues.
Their previous business Melrose had a highly successful formula of buying unloved manufacturing businesses, improving them, then selling at a profit.
Rosebank wants to do the same again and has just raised more than £1billion to finance its first acquisition, of US firm Electrical Components International. What this demonstrates is that the London market is totally open for business to firms with the right story and credible leadership.
How to shift the narrative? Getting rid of stamp duty on share deals would be a great move. Pension funds need encouragement to invest more in UK equities, less in government bonds and overseas assets. Perhaps even more important, this Labour Government needs to grow up.
The puerile belief in Labour echelons is that the only worthwhile citizens are those working in the public sector and that the wealthy are to be taxed until they squeal.
This vindictive attitude is driving rainmakers to quit the UK. It is a huge deterrent to founders who might have considered listing their companies here.
Peckham, who unabashedly declares that the aim is to make a lot of profit in the UK and pay a lot of tax here, may not be a man to appeal to socialist tastes.
But if there is no wealth being created, there will be none to redistribute.
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