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UK tech firms favour London over New York for IPO, survey finds

Written by Wed 29 Nov 2023

A survey by accounting company, RSM UK, found that 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 that 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%). Respondents could select more than one option. 

‘I was pleasantly surprised by optimism from IPO aspirants about the UK as a place to float their business. The response sits counter to the general narrative, but shows there is confidence in the UK,” said Ben Bilsland, Partner and Media and Technology Industry Senior Analyst at RSM.

RSM said the retention of the best media and technology businesses on the London exchange must be a priority for the UK to be considered a global competitor in the industry.

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

“We have seen a trend of UK tech companies in particular looking to the United States to IPO, highlighting concerns that more needs to be done to avoid UK companies falling behind its competitors. However, this middle-market confidence in the UK is an encouraging sign,” added Bilsland.

In August, prominent UK chip firm, Arm, applied to list on the US stock exchange instead of the UK. This heightened concerns about London’s attractiveness to leading tech companies. A month later, Hertfordshire-based semiconductor company, Imagination Technologies, was also set to go public with an IPO in New York.

RSM said the US exchange is dominated by tech stocks, including Microsoft, Apple, Tesla, Alphabet, NVIDIA, and Amazon. Whereas, the UK has a different composition and does not hold the same range or depth of stocks which could be off-putting for tech companies.

However, Partner at RSM UK, Paul Watts, said that for many UK-based companies, the London Stock Exchange is more accessible than other exchanges. He added that it is a big advantage for companies to be closer to investors in London. 

“A small fish in a big pond could get overlooked in the US by investors. But the UK can sometimes lose out to the US exchanges once businesses grow significantly. That is not necessarily always the right move for all businesses, as the US markets can be harder to breakthrough, due to higher costs and more stringent regulation,” said Watts.

Government Support a Factor in IPO Listing

RSM found that businesses that have gone public tended to express a more positive view about government support compared to other types of businesses. A total of 16% of tech companies who plan to list strongly agree that the UK Government supports the media and technology sector. A further 60% said that they agreed with the statement.

For business leaders of seed and venture capital-backed businesses, about 34% strongly agreed that they feel supported, and an additional 47.2% agreed to some extent.

There has been a significant increase in the number of early-stage technology businesses in the UK. RSM said the fact that these growing businesses feel supported is a positive indication of the UK’s attractiveness.

With an upcoming election in 2024, RSM said business leaders will be closely examining Government policy proposals. They will also be considering the potential impact of any changes in the political leadership or regime in the UK on their businesses.

France and Germany Lead in Global Expansion for UK Companies

RSM said while the focus for UK technology and media businesses will be on their own Government, global expansion will also be key for their development.

Respondents were asked about their top choices for European cities for global expansion, with Paris and Berlin emerging as the leading options. Paris secured 26% of votes from UK businesses, while Berlin closely followed with 22%. Notably, 18.5% of tech businesses opted for ‘none of the above.’

The options for expansion were Amsterdam, Barcelona, Berlin, Dublin, Helsinki, Lisbon, Paris, Stockholm, and Zurich.

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Written by Wed 29 Nov 2023

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