UK tech businesses eye up London listing in boost to IPO market
Over three quarters (76%) of 300 tech businesses surveyed by RSM UK, said they are considering listing on the public markets within the next five years.
Of those with plans to become a public company, over half (57%) would choose to list in the UK, up from 53% last year. This follows two recent listings on the London Stock Exchange - The Beauty Tech Group, advised by RSM UK, and Princes Group – in a sign the UK IPO market is slowly coming back to life after a period of stagnation.
In contrast, only 26% of tech businesses would choose to list in the US, a steep drop from 47% last year; while 36% plan to list in Europe, down from 42% last year.
Ben Bilsland, partner and head of technology industry at RSM UK, said: “There are clear signs of improving confidence among business leaders in UK tech, and we’re seeing this come through in their intentions to explore a UK listing. This is particularly encouraging, as UK tech companies have typically looked towards a US market listing, due to the ability to access capital on a much larger scale.
“There’s a sharp reduction in those looking to list in the US, falling from 47% to 26% this year. With significant instability around US government policy, it’s possible this has encouraged UK businesses to explore options closer to home instead. Sky high valuations of AI stocks in the US, fuelling concerns of an AI bubble and a potential market correction, may also be adding to caution among businesses.”
Diane Craig, partner and head of capital markets at RSM UK, added: “More tech businesses may also be leaning towards the UK stock market given its broader base of international companies and investors. Recent regulatory changes that have streamlined the UK listing regime and made the UK a more cost-effective option could also be factors. Ultimately there are advantages to both the UK and US markets, and the most suitable option will vary depending on the business’s individual characteristics.
“Recent listings on the London Stock Exchange, following a period of low activity, will come as a boost to the markets. As the number of IPOs increase, so will the attractiveness of the markets, and the prospect of listing as a route for business growth. To ensure tech companies follow through with their plans to list in the UK they need good levels of investor support. This relies on improved consumer and business confidence, greater certainty around future tax rises and, ideally, generous tax incentives that encourage investment.”