Takeovers drain £285bn from London as listing crisis deepens
A trio of takeover bids underscores a massive capital drain from London that threatens to starve the UK economy of vital public market funding unless its next leadership overhauls pension investment rules.
Three UK-listed companies accepted takeover bids on Thursday, highlighting a relentless exodus of corporate value from London. Swiss group ABB is acquiring safety valve maker Rotork for £4.1bn, while US investors are taking precision optics firm Gooch & Housego for £346m and pawnbroker Ramsdens for £230m. Shareholders secured immediate premiums of 73%, 41% and 49% respectively.
These deals illustrate a deepening structural crisis in the UK's public markets. Since early 2023, buyers have bid for 154 UK companies valued above £100m, stripping £165bn of market capitalisation from the public arena. A further £120bn has vanished as seven large corporations shifted their primary listings abroad, predominantly to the US.
The capital flight is almost entirely one-directional. Against the £285bn exiting the public markets, only 11 new listings worth more than £100m have arrived in London, bringing in a mere £6bn. UK companies in the sub-£10bn bracket remain chronically underpriced by international standards, leaving boards under intense pressure to sell to better-capitalised foreign rivals.
Repeated regulatory interventions have failed to halt the drift of liquidity toward New York, which absorbs roughly 70% of global stock market value. Adjustments such as permitting founders to retain outsized voting control, mimicking US tech governance structures, have done nothing to attract new entrants.
This hollowing-out threatens the broader economy because public markets are essential conduits for channelling capital into productive, wealth-creating businesses. Chancellor Rachel Reeves has instead directed her Mansion House reforms toward private infrastructure and unlisted assets, offering only minor concessions to public equities such as a stamp duty holiday for new listings.
The pension puzzle
Analysts argue that rescuing the London market demands a fundamental overhaul of the UK pension system, which uniquely lacks the domestic investment focus seen in other countries. Charles Hall, head of research at broker Peel Hunt, has proposed mandating a 20% UK weighting in default defined contribution pension schemes. He also recommends minimum UK weightings for tax-free individual savings accounts and the complete abolition of stamp duty on share trading.
Andy Haldane, president of the British Chambers of Commerce and an adviser to leadership contender Andy Burnham, has championed similar tax incentives. Pointing to a pre-1997 dividend tax credit that successfully directed pension money into UK firms, Haldane argues reform is "about correcting the [absence of] ‘home bias’ that, at present, distinguishes the UK pension system from all others around the world".
