A cautious revival of the London IPO market

Financial Times

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The London Stock Exchange has had a disappointing few years. It has been devoid of any major initial public offerings since Deliveroo’s disastrous 2021 floating. Investors and market bosses have been let down, too, by a series of snubs and turnabouts, including former UK tech star Arm’s decision to list in New York and Turkish miner WE Soda’s last-minute withdrawal, both in 2023.

So it is with a measure of caution that many in the City have welcomed reports of three companies that appear set to list in London. Raspberry Pi, the British microcomputer maker, has confirmed a listing with an expected valuation of up to £540mn. Shein, the Singapore-based Chinese fast fashion conglomerate, is understood to be planning a London listing — and has reportedly been wooed by Labour and the Conservatives. Anglo American is also said to be considering an IPO of De Beers, the South African diamond giant, via the London market as part of a radical restructuring plan.

While all this would be a boost for the London market, it is not a perfect reopening. In the “vibes”-based IPO market, the company that tests the sluggish exchange will set the tone for those that follow. In an ideal world, a new era would have been ushered in by the listing of a homegrown tech star or earnings behemoth. Raspberry Pi does not exactly fit the bill, with a modest valuation and products that have limited use beyond students and hobbyists.

For Shein, by far the largest of the three, London was not its first choice. Rather, its earlier attempt at listing in New York was apparently rebuffed by anti-China sentiment. Its lustre is further dimmed by accusations of forced labour, and it remains possible that the Chinese Communist party could revoke its blessing. Market reactions to De Beers could vary, too, given its complex relations with the Botswanan government and questions over the sustainability of its business model.

However, this is the real world — not one where wishful thinking alone can create a British tech giant. Raspberry Pi and Shein IPOs ought to be celebrated. Market authorities and advisers should be dedicated to seeing their listings over the finish line. A De Beers listing is also worth encouraging, provided its sellers can address its business fundamentals.

The London market is currently experiencing

The full article is available here. This article was published at FT Markets.