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UK tech firms prefer home market for IPOs, survey shows

London IPO
Image credit: pxl.store / Shutterstock

Almost three-quarters (72%) of UK tech companies would favour an IPO in London instead of overseas, according to a new study.

A survey of 2,500 companies conducted by equity management platform Ledgy found that the London Stock Exchange was the preferred float destination for tech firms, despite the recent narrative that the US is a more attractive market.

Last year saw a drop off in IPO activity in the London markets, with the fewest new IPOs since the financial crisis. The pressure was amplified by a handful of perceived snubs to London last year, such as the public float of Cambridge-based semiconductor designer Arm in New York.

The London markets took a reputational hit last year but it was not alone in underperforming, with the US and the rest of the global markets similarly feeling the macroeconomic squeeze.

“London Stock Exchange bosses should be relieved that for most UK companies, London is still the preferred destination for a stock market listing,” said Yoko Spirig, Ledgy CEO.

“That said, our finding that the macroeconomic environment was the biggest factor putting companies off an IPO suggests that we need further softening of inflation and interest rates through 2024 for the tide to really start turning.”

The Ledgy report also found that larger tech firms – companies with more than 1,000 employees – were largely holding off on fundraising, with only 48% raising cash in the last 12 months.

The majority (70%) of smaller tech firms, defined in the report as having 250 to 999 employees, contrastingly did raise cash last year.

Spirig said this shows “the pivot away from ‘growth at all costs’ is real”.

“Private companies need to know that stock exchanges will have the liquidity and appetite to support ambitious, innovative companies entering the public markets.

“But if IPOs are not a realistic option, companies also need to be confident that the growth capital to support continued scale will be there.”

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