The spate of recent raids on British companies has again exposed the all-too-familiar problems facing the London-listed stock market, once a bastion of global capital raising.
In recent days, Bodycote, Gamma Communications, and Capricorn Energy revealed takeover offers, just weeks after it was confirmed that easyJet would be taken private. The value of deals targeting UK-listed companies has exceeded $100bn (£74bn) over the past year alone.
The pattern is well-established: a London-listed business, undervalued by its own market and unable to access growth capital, gets acquired by private equity.
UK plc has started to look like the aisles at TK Maxx, as bargain hunters fill their trolleys with good businesses at knockdown prices. There is little wonder why London is languishing behind New York as the desired listing destination.
As chief executive of Gresham House, an investment management business, I have seen this problem up close.
In 2023, our company moved from the London Stock Exchange and into private ownership after our valuation on the Aim, the junior stock market, was significantly below what we believed to be its real value. We could not access the long-term growth capital we needed from the public markets on sensible terms, opening the door to alternative options.
As a result of going private, we have been able to access capital and grow to become the third-largest forestry manager and fifth-largest natural capital manager in the world.
Westminster keeps treating the ongoing listed exodus as a technical problem, with an adjustment to listing rules here and a governance tweak there. That is simply wrong.
I have spent three decades in investment management, and over that time Britain has increasingly built a culture that treats success with cynicism rather than reward. Heavier regulation, more governance oversight, and a tax system that takes more.
In America, if you fail, people ask when you are going to have another go. In Britain, if you succeed, envy inevitably follows.
We don’t have a culture of risk and reward any more. We need a shift back towards recognising and rewarding entrepreneurial success, such as we see in Silicon Valley, where failure is treated as experience and success is left alone to compound rather than taxed heavily.
Markets like the Aim were meant to be a magnet for ambitious UK companies and people with long-term capital willing to back them. That only works if investors are allowed to think in years, not quarters.
You cannot ask someone to back an early-stage company for 10 or 15 years while taxing and regulating them on a six-month cycle. That mismatch is a big part of why many of our exciting innovators prefer to be private equity-owned and domiciled abroad.