Samuel Johnson famously said that “when a man is tired of London, he is tired of life”. In recent months, some have asked whether companies are growing tired of London and are seeking to list and raise funds elsewhere. This follows a decline in listings on the London Stock Exchange and several high-profile moves to US exchanges. Interest rates, inflation, and geopolitical uncertainty have spooked markets across the world. London has had the additional complication of Brexit to deal with.
I know London’s strength is being a place where people from all over the world can connect to prosper. This is the theme of my year as Lord Mayor, which will celebrate the many knowledge miles of our Square Mile – the world’s coffee house.
The City’s ‘knowledge miles’ are what Johnson was alluding to when he said, with a little exaggeration: “The happiness of London is… there is more learning and science within the circumference of 10 miles from where we now sit, than in all the rest of the world.” I say exaggerating because you don’t need to go 10 miles when the Square Mile shows that one will do!
As well as the great universities, much of that learning and science was nurtured in the coffee houses of Johnson’s day, which came to be known as ‘penny universities’. One of these, Jonathan’s Coffee House, gave rise to the London Stock Exchange.
Today, London is Europe’s largest capital market, with a deep pool of liquidity and international investors. Capital markets are connectors par excellence: they connect those with capital to invest to those who can make good use of that capital, so helping the economy grow.
London has the most diverse investor base of any major global exchange, with most investors coming from outside the UK. It also has the geographical advantage of standing in the middle of the world’s trading day, overlapping with 27 markets.
Furthermore, the capital’s world-class financial markets ecosystem of banks and investors allows companies of all sizes to address any type of financing need – and at speed. The City is home to the world’s densest cluster of supporting professionals, and the competition that this engenders reduces the cost of raising capital compared with other markets.
While the number of listings has fallen, the amount of capital raised in London (combining new listings and cash raised by existing companies) continues to grow
The Square Mile is also where the world comes to restructure its balance sheets. We have the world’s largest commercial and specialist insurance market, operating in more than 200 countries – with a talent pool of more than 320,000 people working across the UK – with an enabling regulatory environment, access to incredible skills and talent, and unparalleled global connections.
These are all reasons London remains the leading capital-raising venue in Europe. While the number of listings has fallen, the amount of capital raised in London (combining new listings and cash raised by existing companies) continues to grow.
The City of London knows it needs reform to enable our capital markets to stay competitive. It is at the heart of the City of London Corporation’s Vision for Economic Growth, our roadmap for the future of financial and professional services. The government has helped with the UK Listings Review, the Edinburgh Reforms, and the Financial Services and Markets Act, but further work is critical to ensure the UK is the place where companies can start, scale and succeed.
The Mansion House reforms and Mansion House Compact, announced last year, are unlocking capital from the UK’s largest defined contribution pension funds to invest in unlisted equities, complemented by large-scale investment vehicles to deploy capital most effectively – which should benefit pension savers as well as grow businesses.
The City Corporation is also a strong supporter of the Capital Markets Industry Taskforce, chaired by Julia Hoggett, of the London Stock Exchange Group, which continues to put forward proposals to strengthen our capital markets and is working on a new model for the Capital Markets of Tomorrow. It is vital that its proposals continue to receive firm backing from government, regulators and the industry.
Only by continuing to reform can London’s capital markets continue their vital work in raising funds for companies from across the UK and around the world. London must remain the market of choice for businesses to turn to, as the world’s coffee house and the world’s capital market.
Michael Mainelli is the 695th Lord Mayor of London
This article was taken from Issue 1, 2024 of The Treasurer magazine. For more great insights, members can log in to view the full issue.