Peel Hunt boss dismisses fears of exodus from London to New York

The head of Peel Hunt, one of the City’s biggest brokers, has dismissed fears that there will be a rush of companies quitting London to list in New York, saying the step would only make sense for businesses with the vast majority of their operations in the US.

Concerns over London’s ability to attract new listings deepened this week after WE Soda, the world’s largest soda ash maker, ditched plans for a $7.5bn initial public offering.

The capital’s struggle to persuade companies to float has hit Peel Hunt, which advises UK businesses on IPOs and deals, as well as supplying research on groups listed in London.

Just five companies have listed in London this year, raising about £30mn, according to data provider Refinitiv. Amid the dearth of IPOs, the decision by building materials group CRH in March to switch its primary listing from London to New York added to concerns over London’s lack of appeal.

However, Steven Fine, Peel Hunt’s chief executive, said the allure of moving a listing to the New York came with “strong caveats”, pointing to higher litigation risks in the US and the fact that it was harder to get noticed in a market with much bigger companies.

“They want to back US companies, backed by US people who live in the US in white picket fence houses, not a chief executive that flies in every three months to check in on the troops,” Fine said, referring to the investor base in the US.

Fine acknowledged that the fallout from last year’s “mini” Budget fiasco and stubbornly higher inflation were clouds for the UK, but expects London to be part of a broader rebound in the global IPO market.

Alongside its full-year results, Peel Hunt said it had seen “tentative signs” of a sector-wide uptick in M&A activity last quarter, as attractive valuations encouraged buyers to seek UK targets.

Over the past year, Peel Hunt has been building out its M&A advisory business as it seeks to diversify its revenues. The group reported a pre-tax loss of £1.5mn in the year to March 31, compared with a £41mn profit in the previous period.

“It’s been an extraordinarily tough time,” Fine said. But he insisted WE Soda’s decision to abandon its IPO plan reflected questions over the company’s valuation rather than a broader malaise in the London market.

“What nobody wants is an IPO to have a poor performance in the secondary market,” Fine said. “That sends all sorts of bad signals.”