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UK companies still considering US listings, says Head of Global Listings at Nasdaq

Written by Wed 20 Dec 2023

Credit: Reuters

Global Head of Listings at Nasdaq, Karen Snow, said UK companies are still considering listing their businesses in the US. 

Speaking to the BBC, Snow said she helped entice Cambridge-based chip designer, Arm Holdings, to list on the Nasdaq, adding that other UK tech firms will follow.

Snow said the Arm listing, which was one of the largest this year, is part of a wider trend where the Nasdaq attracts UK companies away from their domestic financial market.

“We are having a lot of conversations with companies about listing in the US. We get a lot of inbound calls [from the UK] and we also make sure we are in front of the right CEOs,” said Snow.

Snow highlighted that there were many ongoing conversations to get more UK companies over to the US to raise funds through a Nasdaq listing.

London Stock Exchange vs the Nasdaq

The BBC reported that 2023 might be the first time since 1995 that the LSE falls short of raising $1 billion for companies going public.

The UK Government is implementing post-Brexit reforms to revamp financial regulation. The Government aims to enhance London’s appeal relative to European rivals like Paris and Frankfurt.

Earlier this month, MPs on the Treasury Committee named the reforms, dubbed the Edinburgh Reforms, a ‘damp squib’. 

The BBC reported ex-CEO of Newton Asset Management, Helena Morrissey, praised London’s innovation but argued it felt less confident and energetic.

“It’s hard to retain confidence in the face of well-publicised decisions to list elsewhere,” added Morrissey.

There is a longstanding belief that global companies receive higher valuations when listing on US stock exchanges, according to Morrissey. She attributed this partly to the view that UK investors tended to be more risk-averse when compared to US investors.

“So we have an image problem, not helped by revelations about low levels of investment in domestic equities by UK asset owners – pension funds. We need to have the self-belief to invest in Britain – but it needs to be based on reality, not just a PR campaign,” said Morrissey.

Despite these concerns, a survey by accounting company, RSM UK, revealed London remains the most popular place to list an initial public offering (IPO) globally among UK media and tech businesses.

What are the Edinburgh Reforms?

Announced by Chancellor Jeremy Hunt in 2022, the Edinburgh Reforms are 31 measures described as post-Brexit freedoms. The Reforms contain regulations customised to align with the requirements of the UK economy.

This package includes plans on eliminating banker’s bonuses and permission for insurance companies to invest in long-term assets like wind farms and housing. 

In new analysis, the Treasury Committee found six of the 21 changes the Government said it had achieved were not completed.

The Committee questioned if they should even be considered reforms as they involved publishing a document or welcoming a consultation.

However, Economic Secretary to the Treasury, Bim Afolami, said the Government has made significant strides towards cultivating an environment that supports economic growth.

“Already companies worldwide are taking note of the UK’s approach, and we will continue to deliver on our reforms as we make the UK the best place in the world to create and grow a business,” added Afolami.

UK Companies List in the US 

In September, Arm raised £3.84 billion ($4.87 billion) despite calls to list its shares on the London Stock Exchange (LSE). 

A month prior, Arm applied for an Initial Public Offering (IPO) listing on the Nasdaq stock exchange.

While the filing did not list a price, an internal transaction by SoftBank valued Arm at £50.6 billion ($64 billion). SoftBank is a Japanese investment company that acquired Arm in 2016 for £25.3 billion ($32 billion).

In September, Imagination Technologies, a Hertfordshire-based semiconductor company, said it was set to go public with an IPO in New York.

Imagination was previously listed in London, but was taken private six years ago after being acquired by Chinese-backed equity fund Canyon Bridge Capital Partners. At the time of this acquisition in 2017, Imagination was valued at £550 million ($607 million).

In February, UK-based cybersecurity and cloud solution firm, Noventiq, announced plans for a Nasdaq listing. The company said this will be achieved through a potential business combination with Corner Growth Acquisition Corp, a Californian blank-check firm.

Despite these blows to the LSE, a survey by accounting company, RSM UK, found London remains the most popular place to list an initial public offering (IPO) globally among UK media and tech businesses.

In the ‘Media and Technology Survey’, RSM found 64% of UK tech and media businesses selected the UK as a place they are considering an IPO. More than a third chose Europe (38%) and over a quarter favoured the US (26%). 

Of the surveyed IPO aspirants, 31% were on the fence about their confidence in the UK and 15% preferred the US.

In 2023, the Nasdaq raised a total of £10.7 billion ($13 billion), while the LSE raised a significantly lower amount of £768 million ($972 million) during the same period.

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Written by Wed 20 Dec 2023

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