London officials call for governance and pension reforms to attract more IPOs

(Bloomberg) — The British government should prioritize streamlining corporate governance requirements and encouraging pension funds to invest in local stocks to boost the attractiveness of Britain’s capital markets, a survey found.

Regulation is another issue that emerges from a survey of more than 150 executives and directors of London-listed companies by broker Deutsche Numis, due to be released on Tuesday.

“Both the previous Conservative government and the newly-elected Labour government have put rectifying this situation high on their agenda, but FTSE leaders need more assurances about whether significant change is imminent,” Numis said in its release, which was shared with Bloomberg News.

In addition, respondents to the survey – which was conducted at the time of July’s general election – cited executive compensation as key to attracting more initial public offerings in London, with 43% demanding a more competitive pay environment, compared with 38% last year.

Research shows the average chief executive’s salary is rising in the U.K. capital, but New York still trails it. Experts say the country’s pay culture is starting to change, with companies willing to risk investor disapproval to attract and retain talent.

Some 87% of those surveyed by Numis said the U.K. is an attractive market to list or raise capital, with nearly all respondents agreeing that recent reforms by the Financial Conduct Authority would make London “significantly more attractive.” Among other changes, the FCA in late July made it easier for foreign issuers to list in London.

“Only 1% of respondents strongly disagreed with the view that London is competitive, and that’s actually quite encouraging,” Ross Mitchinson, co-CEO of Deutsche Numis, said in an interview.

London has been struggling with a lack of IPOs over the past few years, with locally listed companies moving to New York.

However, the picture could change, with 42% of survey respondents expecting IPOs to increase “dramatically” over the next 24 months and 92% expecting more foreign issuers to list in London.

“We don’t expect a lot of IPOs in the U.K. in the fourth quarter, but people are hopeful that things will improve in 2025,” said James Taylor, co-head of investment banking at Deutsche Numis. “There are solid discussions taking place with private equity and international businesses that find London more attractive following the new listing rules.”

Those considering listing in London include Vivendi SE unit Canal and Greece’s Metallon Energy & Metals. Liverpool-based sports nutrition group Applied Nutrition is also planning a domestic float.

But questions remain about how much room London has to become more attractive to investors, with the survey finding that only 16% of respondents believe the British capital can “dramatically” improve its game, compared with 41% a year ago.

“The positive outlook clearly remains, but where we have seen a drop in optimism this is likely due to FTSE leaders’ belief that the trend towards an improving London outlook has peaked,” Numis said in its report.

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