When the fintech giant Wise floated its shares on the London Stock Exchange in 2021 it was widely seen as proof that the City still had a future as a centre for equity trading. This was London’s largest-ever tech listing: it was one of only a handful of new British companies with a global presence and it was hailed as the perfect example of how the London stock market could still be an effective home for growing businesses. Against that backdrop, its decision today to move its primary list to the United States is a crushing blow. Has Wise just killed the London stock market?
A stock market needs a certain critical mass to survive
Alongside another excellent set of results, Wise also announced today that it was shifting its primary listing to New York, although it will keep a secondary listing in London. ‘We believe the addition of a primary US listing would help us accelerate our mission and bring substantial strategic and capital market benefits to Wise and our owners,’ Kristo Käärmann, Wise’s co-founder and chief executive officer, said.
It is hard to blame him for that decision. Wise is expanding rapidly, and although the shares are up by 21 per cent since the initial public offering, there is little question the business would be worth more to American investors than British ones. Indeed, the shares rose by 9 per cent as the decision was announced.
And yet, it is also a crushing blow to the London market. It was already in steep decline, with the number of companies listed in London falling from 2,400 a decade ago to just 1,600 now. There are virtually no new listings to replace them, with only 18 listings last year, raising a mere £770 million – an 18 per cent fall on a year earlier. High-profile companies are still leaving, such as Deliveroo, which has accepted a takeover offer, while others are opting for different markets, such as the Chinese fast-fashion giant Shein which last month decided that Hong Kong was a better choice for its IPO than London, or Unilever, which chose Amsterdam for the primary listing of its ice cream unit.
The former Conservative Chancellor Jeremy Hunt launched a series of reforms to try and make London listings more attractive, but two years on, it is surely clear that they have failed to stem the exodus or to encourage more companies to list. His successor, Labour’s Rachel Reeves, has largely ignored the issue, even though she promised that ‘stability’ and ‘growth’ would be the priorities of her government.
London has become too bogged down in governance codes and listing rules to make a stock market quote worthwhile. The UK has not been creating enough high-growth companies and investment and pension funds have been more worried about green targets and social goals than returns.
A stock market needs a certain critical mass to survive. It needs to be big enough for banks, brokers, fund managers and journalists to take an interest in it. With Wise’s departure, London is getting close to a tipping point where it no longer has a future – and it may now have gone past the point of no return.
