London’s IPO market, once a cornerstone of global capital raising, has entered a period of pronounced decline as new listings fall to multi-decade lows and companies increasingly turn to rival exchanges. Despite its longstanding reputation and strong institutional framework, the City now faces structural challenges including persistent valuation discounts, diminished domestic investor demand and intensified global competition that have eroded its appeal for prospective issuers. High-profile listing failures, strategic departures to the US, Europe and the Middle East, and broader macro uncertainty have further highlighted the fragility of the UK’s primary markets. After an overview of the market’s recent performance, this article examines the forces behind London’s IPO drought, the rationales driving issuers away and the implications for the future of the City as a global financial centre.

​Introduction

For decades, London has been one of the world’s most important listing venues. The London Stock Exchange (LSE) has acted as Europe’s main capital-markets hub, attracting companies from the UK, Europe and emerging markets because of its deep investor base, strong governance standards and international reach. As recently as 2021, London recorded one of its strongest years in modern history, with over 120 IPOs raising £16.8 billion. This placed the UK among the top global markets for new listings, behind only the United States and Greater China.

The picture today is very different. IPO activity has fallen to multi-decade lows. In 2023, only 23 companies listed in London, raising just under £1 billion, a sharp decline from the post-pandemic peak. Activity weakened again in 2024, with only 18 new listings, the lowest annual figure since records began in 2010. The first half of 2025 has been even slower, with just five IPOs raising around £160 million (based on year-to-date projections), putting the market on track for its quietest year in more than 30 years. London has also slipped down global IPO rankings as more companies choose to list in New York, Amsterdam, Frankfurt or the Middle East instead.

This slump matters for several reasons. For companies, a weak IPO market limits access to public equity and makes it harder to use listed shares for acquisitions or expansion. For investors, fewer listings mean a smaller pipeline of new opportunities and a continued concentration in older, slower-growing sectors. For the wider UK economy, it raises questions about the competitiveness of the City, the effectiveness of domestic capital markets and the country’s ability to attract global investment.

Several forces are driving this downturn. UK equities continue to trade at a discount to US and European peers. Global uncertainty, higher interest rates and volatile markets have reduced risk appetite. Competition from other exchanges has intensified, offering higher valuations or deeper liquidity. UK-specific factors, including the long-term effects of Brexit and low domestic equity exposure from pension funds, have added further pressure.

A Market in Structural Decline

London’s IPO market has historically operated in long waves of expansion and contraction, but the trajectory of the past decade suggests a structural deterioration rather than a cyclical dip. At the turn of the millennium, the city functioned as one of the world’s leading listing venues: in 2000, the exchange hosted 236 flotations raising £17.5bn, supported by a broad domestic investor base, favourable global conditions, and London’s established status as a hub for international issuers.

Although activity moderated after the global financial crisis, the market retained an ability to produce periodic recoveries, most notably in 2014 and again in 2021, when ample post-pandemic liquidity briefly revived issuance. These peaks, however, increasingly masked a weakening underlying trend. From the late 2010s onwards, several slow-moving forces began to erode the market’s foundations. Brexit introduced a prolonged phase of regulatory uncertainty that diverted European and emerging-market issuers towards continental exchanges; elements of the UK listing framework, long regarded as rigorous, came to be viewed as comparatively inflexible; and domestic institutional demand contracted significantly as pension funds reduced their exposure to UK equities.

​By the early 2020s these shifts had translated into a marked contraction in activity: deal numbers fell by roughly 80 per cent between 2022 and 2025, dropping from 34 to just seven, a decline that pushed annual issuance to its lowest level in more than two decades. Over the same period, total proceeds fell from over £9bn in 2020 to £209m in 2025, leaving the UK ranked outside the top twenty global markets for IPO fundraising. The pattern is consistent with a market losing depth and relevance rather than undergoing a temporary downturn.

​Figure 1: London IPO Market

Failures, Withdrawals and Strategic Departures

​The consequences of this erosion are most clearly visible in the series of withdrawn, postponed, or externally relocated transactions that have shaped the recent period. WE Soda’s cancelled 2023 flotation is illustrative. Intended to be London’s largest IPO of the year, the deal collapsed after investors declined to support the valuation sought by management, prompting the company to cite an unusually risk-averse domestic investor base. PureGym likewise abandoned its proposed £1.5bn listing amid the volatility of late 2021 and early 2022, concluding that prevailing market conditions offered insufficient confidence for a successful price discovery process; Olam’s food-ingredients division reached a similar conclusion when it delayed its London listing in 2022 in response to inflationary and geopolitical pressures.

​More strategically consequential were the decisions by high-profile companies to list outside the UK altogether. Arm’s 2023 decision to float exclusively on Nasdaq, despite sustained political engagement from the British government, signalled that London could no longer guarantee valuations competitive with those available in the United States. Established constituents of the London market, including CRH and Flutter, have moved or are in the process of moving their primary listings to the US to benefit from deeper liquidity and higher earnings multiples. Considered collectively, these developments amount to more than a run of isolated disappointments: they indicate a market that has become structurally less capable of attracting or retaining significant issuers. London continues to possess the institutional infrastructure of a major financial centre, but the empirical record of recent years points unmistakably to an IPO market undergoing a period of severe and potentially enduring contraction.

Valuation Gap: Cheaper Equity, Weaker Currency

The starting point is price. UK equities trade at significant discounts relative to US and core European indices on PE and price-to-book metrics. The discount moves around year to year, but a 20–30% gap is familiar enough that it now features explicitly in discussions. This results in some significant problems for issuers.

Firstly, lower multiples translate into less cash raised for the same level of dilution, which weakens the equity cheque and shifts greater risk onto private capital. Secondly, a lower share price results in a weaker acquisition currency, which makes it harder for management to acquire competitors with stock. A founder choosing where to float is effectively deciding what currency the business will operate with for a decade.

Tech and growth companies are most harshly impacted. London’s investor base has tilted towards cash-generative defensives; it is less willing to underwrite matured, loss-making models at or above EV/sales multiples. This is seen in fintech, software and AI-linked names that now benchmark themselves against Nasdaq comps and treat a London IPO as a discount they are not forced to accept.

Rules, Governance and Friction

Before reforms, London’s premium segment rules on free float, dual-class structures, and related-party transactions were more restrictive than in the US, constraining founder control and complicating group structures. New policies aim to merge segments and allow more flexible voting structures; however, changes arrived after several major UK-based companies had already listed on the New York Stock Exchange or remained private.

Governance expectations can shift bargaining power as well. A more demanding regime on related-party deals, sponsor roles and ongoing disclosure raises recurring costs and narrows the set of feasible capital structures for listers. The trade-off is manageable for large and mature issuers; however, for smaller companies, the edge often lies in being able to iterate on governance and capital quickly, which therefore pushes them towards markets where rulebooks are perceived as significantly more accommodating.

Unfortunately, fewer domestic institutions, more take-privates and a steady flow of delistings have left the primary market with a bare set of names and lower turnover than in prior cycles. Therefore, lower average daily volumes have led to wider spreads and more slippage on block trades, as well as higher execution risk for banking groups trying to clear large IPOs. In the most severe case, a loop forms in which thinner liquidity discourages new listings, and the absence of new names in turn limits liquidity.

Macro Window: Selective, Not Shut

The 2020–21 boom in IPOs, which was fuelled by cheap money and a high-risk appetite, has given way to a more selective window as central banks tightened policy amid inflation and investors concentrated on large technology and AI platforms. Capital that might once have backed a range of new issues is now concentrated in a small group of US mega-caps at the top of global indices.

Furthermore, geopolitical uncertainty pushes up risk premiums. Global war and significant political tensions have kept volatility elevated across energy, FX and rates, raising discount rates on dated cash flows and making investors more reluctant to underwrite issuers without a long-listed reputation. In that environment, investors can express macro views quickly using liquid ETFs or options on major US indices. Therefore, committing capital to a UK IPO with limited secondary liquidity and limited research coverage becomes significantly harder to justify unless pricing is exceptionally reasonable.

The volatility of rates and the divergence between the Fed and the Bank of England add further uncertainty. The UK has faced sticky inflation and weaker output growth, so the path for nominal and real yields has been much more challenging to read. When the cost of equity and debt are both moving, capital markets desks struggle to set ranges that satisfy both issuers and investors. The path of least resistance becomes smaller deals, more private rounds, or waiting for a clearer window.

​The UK-Specific Drag

Brexit has reduced the automatic flow of EU institutional capital into UK-listed assets, both through legal barriers and index redesign. The focus has shifted to companies listed on exchanges within the EU. Even when mandates allow UK exposure, political noise and regulatory divergence limit how much risk continental funds will run.

Domestic pensions have also stepped back. Over two decades, UK schemes have derisked from equities into gilts, credit and alternatives, leaving them with some of the lowest domestic equity exposures in the OECD. Policy proposals to steer more long-term savings into “UK productive assets” have attempted to address this; however, they are early, fragmented, and untested at scale. Until a structurally long, price-insensitive home bid re-emerges, banking groups building IPO books cannot rely on local pensions to anchor deals.

Furthermore, slower productivity growth, real income erosion, and policy uncertainty have kept the UK’s growth profile below that of the US and closer towards a sluggish Eurozone average. Forward earnings look weaker; therefore, global asset allocators have marked the whole market down, suggesting cheaper multiples, a higher cost of equity, and a narrower scope of companies for which a London listing clears their hurdle rate.

Where Issuers Go Instead

The US is the apparent hub for global growth and emerging tech: Nasdaq and the NYSE offer deeper specialist investor pools, as well as higher-tolerated revenue and earnings multiples for AI, software, and platform-based businesses. For a UK-founded firm with global revenues, a US listing plugs directly into the largest pool of growth-oriented mutual funds and hedge funds. A key case study to highlight this is Wise. The company had originally listed on the LSE in 2021; however, it later decided to switch its primary listing from London to New York. Despite originally being a poster case for London’s new reforms, management pushed the alteration to gain access to a larger pool of fintech-savvy investors that benchmark Wise against US competitors and for the potential for higher trading volumes, which can lower the liquidity discount applied by investors.

Continental Europe holds a different slice. Euronext and Frankfurt have remained active for mid-caps, industrials and energy-transition names, which are backed by domestic pensions and insurers whose mandates are aligned with EU regulation and currency. For issuers whose customers and regulators are primarily based in the EU post-Brexit, a euro-denominated listing reduces FX risk whilst keeping reporting and takeover regimes under one legal roof.

Furthermore, the Middle East has become a leader for cash-generative assets in energy, utilities and infrastructure. Saudi Tadawul and Abu Dhabi’s ADX leverage oil-funded liquidity and sovereign wealth anchors to support heavily oversubscribed IPOs. A UK-linked asset with significant Gulf exposure can more often than not attain a higher valuation and a stronger anchor book than in London, particularly when local strategic investors view the asset as part of a national industrial strategy.

Asia, primarily Hong Kong and Singapore, remains sector-selective but essential regardless. Consumer platforms with substantial Asian revenues and shipping companies can find greater demand in those markets, alongside structures such as dual-primary listings, REIT vehicles, and infrastructure trusts that align with local investor preferences. For some UK-rooted businesses with significant Asian growth, Hong Kong and Singapore are definitely more compelling than a London quote that prices them out of growth.

Where UK or UK-origin firms choose to list elsewhere, the reasons are consistent: stronger sector-specialist demand, deeper anchor books, more flexible governance, and higher achievable valuation ranges than London currently offers. Until the UK closes the valuation gap and proves that its listing reforms deliver for growth companies, the rational path for many issuers will be to treat London as one option among several rather than as the default.

Outlook

The outlook for the next 12 to 24 months is mixed but not uniformly negative. Most market participants agree that a recovery depends on a clearer and more stable macro environment. If inflation continues to fall and interest rates settle or begin to decline, risk appetite should improve. A more predictable rate path would help stabilise valuations and give issuers greater confidence about timing.

Regulatory reform will also be important. The overhaul of the UK Listing Rules, which simplifies segments, allows more flexible dual-class structures and reduces administrative friction, is designed to make London more competitive for growth companies. The impact will depend on whether these changes translate into successful early listings that signal to the market that the UK is again open for business.

A third potential catalyst is UK pension reform. The government has made it a priority to encourage long-term savings into productive finance, including UK equities. If pension schemes gradually increase their domestic equity exposure, currently among the lowest in the OECD, this could rebuild the structural home bid that historically supported large IPOs.

However, several downside risks remain. The valuation gap between the UK and the US could persist, particularly if the AI-driven rally continues to be concentrated in American mega-cap stocks. If global geopolitical tensions remain high, volatility could stay elevated and keep primary markets subdued. And if investors continue to favour large, liquid US markets, London may struggle to attract the types of tech or high-growth companies that drive modern IPO cycles.

Conclusion

London’s IPO slump reflects both cyclical pressures, such as higher rates, weaker risk appetite and geopolitical uncertainty, and deeper structural issues including low domestic equity demand, persistent valuation discounts and growing competition from rival markets. The result is a market that has lost ground in global rankings and now struggles to attract the pipeline of companies that once viewed London as a natural home.

This matters for the UK economy. A healthy IPO market supports innovation, broadens investor choice and strengthens London’s position as a global financial centre. Without it, the UK risks a cycle of weaker liquidity, fewer growth listings and reduced investment flows.

London can recover, but only if structural reforms are delivered consistently and supported by a more stable macro backdrop. Clearer regulation, stronger domestic savings flows and improved valuations will be essential. If these conditions align, London can begin rebuilding credibility as a competitive listing venue, although the recovery is likely to be gradual rather than immediate.

​By: Federico Schizzi, Lara Sofia Wild, Zafer Ilkiz

​Sources:

• EY
• PwC
• CFA Institute
• UK Government
• Capital Markets Industry Taskforce / New Financial
• White & Case
• IG
• Kreston Reeves
• Bird & Bird (Two Birds)
• Fintech Magazine