Thursday saw three more overseas takeovers of UK-listed companies, adding to a growing trend that has seen £285bn of stock market capitalisation leave London since the start of 2023, while only £6bn has arrived via new listings. The deals include Bath-based Rotork, a safety valve maker for pipelines, being acquired by Swiss group ABB for £4.1bn; Gooch & Housego, a precision optics specialist for aerospace and defence, bought by a US investment firm for £346m; and Ramsdens, a financial services and pawnbroker firm, also taken over from the US for £230m. Shareholders received premiums of 73%, 41%, and 49% respectively, but the broader picture is one of a shrinking stock market.
Takeover Wave Highlights Imbalance
According to a report by broker Peel Hunt titled Selling the Family Silver, there have been 154 bids for UK companies with a market value over £100m since the start of 2023, totalling £165bn of capitalisation. Additionally, £120bn of capitalisation has left via seven large companies moving their primary listings abroad, mostly to the US. In contrast, only 11 new listings of companies worth over £100m have occurred in London, representing just £6bn. This stark imbalance has prompted calls for political action.
Nils Pratley, writing for The Guardian, notes that while politicians, regulators, and the stock exchange have held consultations and made policy changes—such as altering listing rules to allow founders greater voting power—these measures have failed to stem the tide. The UK market remains underpriced internationally, boards face pressure to sell, and liquidity gravitates towards the US, which accounts for about 70% of global stock market value.
Pension System Reform Key to Reviving Market
Pratley argues that the hollowing-out matters because stock markets are critical for channelling capital to wealth-creating assets. Chancellor Rachel Reeves's Mansion House compacts focused on infrastructure and private assets, largely ignoring public markets. To reverse the trend, Peel Hunt's head of research Charles Hall proposes measures including a 20% UK weighting in default defined contribution pension schemes, a minimum UK weighting for Isa tax breaks, capital tax reliefs for entrepreneurs listing in London, and removing stamp duty on share trading.
Andy Haldane, president of the British Chambers of Commerce, has called for shifting incentives and tax reliefs to channel more capital into UK firms. He highlighted that before 1997, the UK's dividend tax credit regime favoured pension fund investment in domestic companies. Haldane argues for correcting the absence of 'home bias' that distinguishes the UK pension system from others globally. Pratley concludes that reviving the London market requires politicians to recognise its value and act decisively.
