Nasdaq has been reportedly alluring UK companies away from their home ground for listing on the index
Arm Holdings plc, a British semiconductor and chip designer, raised over $4.87 billion in September this year by getting listed on Nasdaq. It announced its listing in the US in March, sending a blow to the London Stock Market, despite heavy lobbying.
Karen Snow, global head of listings at Nasdaq, was responsible for snatching Arm Holdings from London’s clutches. She attracted the Cambridge-based designer with an easy listing and access to capital. She added that more UK tech companies will follow the same trajectory in the future. The reason stated is the ability to raise funds.
The Nasdaq and the London Stock Exchange (LSE) have had a huge disparity in raising funds. Since 1995, this was the first year that LSE was unable to cross the billion-dollar mark for raising capital for firms to list. The Nasdaq raised $13 billion in 2023, and LSE was able to accumulate $972 million.
Nasdaq has been reportedly alluring UK companies away from their home ground for listing on the index. The Arm listing has opened gates for numerous countries to vouch for the US market.
Snow said that her office is in talks with various companies for listing in the US stock market. They are receiving inbound calls from UK firms, and they make sure that they are in front of the right person to talk with.
The LSE is perceived to be a crucial junction in the financial industry and a pathway to raise capital for initial public offerings (IPOs). It has helped various companies raise money by selling their shares. It has provided financial services jobs in the City of London and much more.
The government has been bringing in post-Brexit reforms aimed at modernising the financial system and improving the stature of LSE in comparison with its European peer markets in Paris and Frankfurt.
In the decision-making matters related to listing where the companies should list their shares, recently, a lot of them have opted to list away from London or are in the planning stage to move to foreign land.
Paddy Power and Betfair owner Flutter said that it had received a green signal to list its shares in the US starting January 29. Its primary listing will be from London, and it is expected to move its main listing to the US later on.
TUI Travel PLC, a Crawley-based leisure travel company, is dropping its plan for LSE and moving for a single listing in Frankfurt.
CRH, a Dublin-based buildings material supply, and Ferguson, a plumbing and heating products distributor, had also moved their listing to the US before Arm’s listing on Nasdaq.
There is speculation that both these financial capitals are fighting against each other to persuade the Chinese fast-fashion brand Shein to list itself on their respective exchanges.
Helena Morrisey, a finance veteran with work experiences at investment firms Newton Asset Management, Legal & General, and AJ Bell, said that although London is continuously innovating, it feels a little down on confidence and less on enthusiasm. It becomes extremely hard to hold on to confidence in times of publicly announced decisions to move away from listing.
Baroness Morrissey said that historically, there has been a perception that global firms can gain higher valuations by selling their shares on the US stock exchanges because UK investors are comparatively more risk averse than their American counterparts.
She added that the UK also has an unending image problem that can be solved by announcing to the public the lower level of investment in local securities by UK asset owners like pension funds, etc. They need to believe in the Invest in Britain strategy curated upon reality and not just a PR campaign.