Almost one in four quoted companies currently see no advantage to maintaining a share listing in London, according to a new survey by the Quoted Companies Alliance (QCA).
The QCA’s latest small and mid-cap sentiment index found widespread concern around depressed valuations amongst quoted companies. It also revealed concern around a lack of investor interest and excessive compliance holding back their performance and growth.
Respondents – who represent firms listed at the smaller end of the London Stock Exchange – said it has never been harder to raise funds through the public market than at any other point in the QCA survey’s 12-year history.
Companies said if they were to raise capital over the next year it’d be through bank finance, rather than tapping into the public market. This is only the second time in the survey’s history that this has been the case.
The survey comes amidst widespread concern about the state of London’s public equity markets, with frustration at poor price to earnings ratios as well as a lack of liquidity.
Regulatory burdens are also frustrating C-suite execs across the small- and medium-cap space.
However last week London Stock Exchange Group boss David Schwimmer hit out at negativity in the City, pointing to Arm’s IPO in New York – with the firm now trading below its offer price – as proof that the Square Mile does not have unique problems.
Against this backdrop, the QCA found optimism over business prospects and recruitment plans among quoted companies is now at its lowest point since the onset of the pandemic.
James Ashton, chief executive of the QCA, said the figures act as a “grim reminder” that if London wants to remain an international listings venue, then things need to change.
“The constituents of the FTSE 100 will always be fine, but the ‘long tail’ of companies and their supporters that contribute immeasurably to the City’s broad ecosystem are suffering,” Ashton said.
“With the loss of 100 public companies from the London markets in the past year alone, more must be done so these markets work for their customers as well as the next generation of entrepreneurial ventures.”
Over half of directors surveyed by the QCA said that diverting more ISA savings into UK equities would have a notable impact on their companies. Almost one in four directors believed that removing stamp duty from the trading in shares of main market companies outside the FTSE 100 would be beneficial.
In addition to these asks, the QCA called on the government to build on existing investment incentives through the extension of sunset clauses for enterprise investment schemes and venture capital trusts beyond 2025.
The alliance also called for the fast-tracked introduction of a research platform to expand the volume and value of equity research available to investors. This would be funded through the introduction of a stamp duty rebate, the QCA said.