Subject to regulatory approval, The London Tunnels is set to be the first UK listing of the year.
The company confirmed plans to list on the main market this month, more than six months since the last LSE listing.
And to clarify before I make my point, I have no issue with the company or tunnels or London (well, no more than most), but I don’t think it is the type of company the prime minister or the chancellor were pining to see list in the UK.
The London Tunnels is a company seeking to “extensively” restore, adaptively reuse and bring back to life the Kingsway Exchange Tunnels in Central London, a system originally built in the 1940s.
Running between Holborn and Chancery Lane tube stations, the company is seeking to restore the “rich history” languishing below the street level and collaborate with technological and entertainment companies to make it a visitors’ site. Lovely, I am all for that.
The irony for me is that the residents of 10 and 11 Downing Street have been on a consistent campaign for London’s bourse to become the next Meta-Microsoft thinktank, clamouring for technology companies to bring their businesses here.
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Back in 2023, Sunak spent the opening days of November schmoozing the world’s tech leaders at AI Safety Summit 2023. (We all remember the Number 10 binary-riddled door they made for it, right?)
Elon Musk, the world’s richest person, Mustafa Suleyman and Demis Hassabis, co-founders of DeepMind, and Sam Altman, who founded ChatGPT creator OpenAI, were in attendance.
This, combined with months of rhetoric from Downing Street, makes it clear that when people think of the UK, they want them to think of modernisation, cutting-edge technology and a place of “deep-dive discovery”.
Pre-summit, Hunt was asked about the prime minister’s ambitions for the UK, and he said it was key for the country to become a “science and technology superpower”, claiming “the biggest opportunity for the UK going forward is to be the world’s next Silicon Valley”.
“We have the ingredients to do something remarkable,” he said.
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Indeed, there is an entire section on the London Stock Exchange website literally called Tech IPOs – Why Companies Choose London making the case for them to make their home here.
And I don’t think an engineering firm quite sets the tone they were after.
I agree it would be a great thing for the LSE and the UK generally to have more firms listing here – and a greater diversity of them – since it has, arguably, struggled to maintain its status as a global centre of finance.
Excluding AIM from here on out, the last IPO was CAB Payments back in July. Meanwhile, the Nasdaq and New York Stock Exchange, combined, have had eight IPOs so far this year, according to the IPO Monitor.
CAB was the biggest UK IPO of the year, but its shares plunged 76% within three months after investors were caught out by limited risk disclosure in the company’s IPO prospectus, which came home to roost when the company was forced to slash revenue expectations due to central bank interventions in several African currencies.
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This is less of an issue with it being listed in the UK specifically, but it acts as a metaphor for the fact that, overall, we’re not the ‘leaders’ on this front the powers that be had hoped.
At the end of last year, we asked if the UK could get to a point where it was considered an IPO hub again, and the sentiment of its likelihood wasn’t all that great.
IPO proceeds on the London stock market fell 36% year-on-year in the third quarter of last year, according to data from EY, although this matched a global picture of lacklustre IPO results last year.
But the point still stands that the UK has been struggling to both capture new companies’ attention or even keep that of the ones already committed here.
The state of UK capital markets was described as “significantly concerning” by several industry players, and Simon Rafferty and Sunil Dhall, co-chairs of the UK Equity Markets Association, said the current backdrop of languishing IPOs was damaging the UK’s “economic standing”, as public markets are the “lifeblood” of any economy.
The year has only just begun, and I hope we get to cover a lot more UK IPOs in due course. But in a difficult few months for the government (cough, general election, cough), I can’t help but think this wasn’t the ‘new year, new UK’ they were aiming for.
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