The London Stock Exchange (LSE) has had a difficult run of late.

Last month, Glencore’s cobalt unit abandoned its proposed IPO. That was followed by US pharmaceutical group Indivior cancelling its planned secondary listing in London, and fintech firm Wise announcing it was considering shifting its primary listing to the US.

These headlines come amid a broader decline in UK IPO activity. Listings have dropped sharply from their post-COVID peak, falling from USD 26bn across 142 deals in 2021 to just USD 3.5bn from 16 deals in 2024.

Still, the outlook may not be as bleak as the historical record might suggest. London remains the most liquid equity market in Europe and has been the focus of sweeping reforms aimed at revitalising its appeal.

The reforms include a more flexible, disclosure-based listing regime and the streamlining of dual-class share structures—measures designed to enhance the LSE’s competitiveness on the global stage.

“The UK reforms aimed to re-establish London as a viable alternative to the US, not as a ‘Singapore-on-Thames’,” Mark Austin, partner at Latham & Watkins, said. “The focus was on removing friction, with a return to a disclosure-based regime now increasingly being echoed by other global exchanges.”

Introduced in 2024, the reforms are already gaining traction. Companies are beginning to cite the regulatory changes as a reason to consider London as a listing venue.

“The reforms have made a significant difference to companies and we’re already seeing companies taking advantage of the changes to tap the capital markets,” Lauren Davies, Director, UK ECM at BNP Paribas, said.

All eyes are now on Chancellor of the Exchequer Rachel Reeves’s Mansion House speech this week.

Market participants will be watching for further clarity on individual savings account (ISA) reforms, pension fund mandates, and broader efforts to boost domestic investment in UK equities. There is also interest in whether the government will revisit its decision to delay a proposed cut to the cash ISA cap—a measure dropped after political resistance.

Yet structural tax changes are not enough. “Tweaking ISAs and stamp duty helps around the edges, but it’s not transformative,” a capital‑markets lawyer, speaking anonymously, said. “Extend Enterprise Investment Scheme tax relief to a wider class of shares — it’s a powerful tool for UK-based investors and delivers much better returns from a retail perspective.”

Flowing the Wrong Way

Despite reform efforts, many point out that the UK has experienced persistent monthly investor outflows since early 2023.

Data from Calastone, the London-based fund transaction network and fintech infrastructure provider, shows that GBP 795m was pulled from UK-focused equity funds in January alone, with over GBP 2.9bn withdrawn across eight consecutive months since early 2023.

But even that doesn’t paint the entire picture, according to Austin.

“The data skews the story on UK outflows by missing the institutional capital inflows into the market—it only reflects retail and regional flows. There is plenty of capital in the UK market, which is why the FTSE has outperformed the S&P year to date—[Nevertheless], boosting UK retail support and rediscovering UK retail culture, remains key.”

However, institutional appetite hasn’t disappeared, but the focus has shifted.

Austin said: “Global investors now care less about listing venue and more about company quality with larger IPOs (USD 3bn+) draw more institutional support, though success isn’t guaranteed, small-cap deals often get retail backing, while mid-caps remain the most unpredictable.”

The Great IPO Hope

The UK’s IPO hopes were boosted when it was reported that Hg aimed to list its Nordic software business Visma in London.

With an expected valuation north of EUR 20bn and a potential 2026 float, it would be a notable boost for the LSE—and a signal that private‑equity sponsors are returning to public markets as part of their exit strategies.

“IPOs are cyclical and may not always be the best option, but we’re seeing sponsors return to public markets as part of their exit toolkit,” BNP’s Davies said. “They’re realistic about valuations, using the IPO as a first marker, with smaller, sensibly priced deals that perform in the aftermarket and allow for monetisation over time—just as capital markets are meant to function.”

Still, a single high-profile deal won’t solve London’s identity crisis.

“The UK public markets need to carve out a clear identity. Failing to do so — and instead drifting into the role of just another offshore capital markets venue for Europe post-Brexit — would be madness,” the lawyer said.