Technology and media IPO aspirants prefer London to New York

Despite recent high-profile listings by UK businesses in the US, London remains the most popular place to list globally among UK media and tech businesses, beating the US and Europe, according to research by RSM UK.   

Of those businesses with plans to become a listed company*, nearly two-thirds (64%) selected the UK as a place they are considering an initial public offering (IPO). More than a third chose Europe (38%) and over a quarter favoured the US (26%). Respondents could select more than option. 

The findings suggest London is still seen as a global place to list with great incentives. For example, on London’s AIM market, UK investors benefit from tax incentives such as the enterprise investment scheme, and venture capital trusts and shares on AIM can qualify for inheritance tax relief. Over half (59%) of media and technology businesses claimed the UK was a better place to gain access to funding - whether by debt, raising capital or exploring a public listing - than the US.

Ben Bilsland, partner and media and technology industry senior analyst at RSM UK, said: ‘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 plc falling behind its competitors. However, this middle-market confidence in the UK is an encouraging sign. 

‘The New York Stock Exchange is dominated by tech stocks, making it a big pull for technology companies, while the UK exchange has a different composition. There is work to be done if London is to become “Europe’s place of choice” to list for up-and-coming high growth companies, a goal recently set out by UK chancellor Jeremy Hunt. For the UK to compete globally, attracting and retaining the best and brightest media and technology businesses on the London exchange has to be a priority.’

Paul Watts, partner at RSM UK, added: ‘For many UK-based companies, the London Stock Exchange is more accessible, and it’s a big advantage 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’s 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. There are important factors to consider, and one size doesn’t fit all - each company has its own unique circumstances and needs.

'While the IPO market has taken some recent blows and trading has been quieter than the private equity market, this stems from soaring inflation, the war in Ukraine and other economic headwinds which have dented investor confidence. Looking ahead to next year, we expect to see investor confidence start to recover, and there’s still significant amounts of capital yet to be deployed.’