Sky News understands that the Chancellor and London Stock Exchange officials will use the May 16 event to woo tech companies as concerns grow about an exodus from the city.
From Mark Kleinman, City editor @MarkKleinmanSky
Saturday 27 April 2024 11:36am, UK
Jeremy Hunt is convening a summit aimed at attracting more companies to the London Stock Exchange as the exodus of companies being robbed by overseas and financial predators accelerates.
Sky News has learned that the Treasury has invited the bosses of some of Britain's most important private companies to attend a meeting next month at Dorneywood, the Chancellor's weekend country retreat.
According to sources, the one-day event on May 16 was aimed at fintech and biotech entrepreneurs behind potential IPO candidates.
Bim Afolami, the city minister, and Lord Petitgas, the prime minister's chief economic adviser, will also be present, alongside key government officials and London Stock Exchange executives, the sources added.
In the invitation, a copy of which has been seen by Sky News, the Treasury said participants and the Chancellor would “discuss the UK's capital markets and how they can support innovative, high-growth businesses like yours to achieve your growth objectives”.
“UK capital markets play a key role in our economy: driving growth, creating jobs and facilitating investment.”
“The Government is committed to ensuring the UK remains the best place for businesses to grow and is already implementing an ambitious program of reforms to improve the UK’s competitiveness.”
Dozens of companies, including digital banks Monzo and Starling Bank, are said to have been on the invitation list.
The Dorneywood summit has been planned for several months, officials said. But they denied it was being held in response to a spate of companies announcing in recent weeks that they would receive takeover offers or unilaterally withdraw from the London market.
Chancellor Jeremy Hunt. Image: PA
This week's moves for Anglo American, the £30bn mining giant, and Darktrace, the cybersecurity firm, have reinforced the impression of increasing “de-equitisation” of the UK stock market.
Although none of these deals have yet to be formally agreed, a number of others are already in place, including International Paper's bid for DS Smith, the FTSE 100 paper and packaging group, revealed by Sky News last month.
Other companies that have signed deals with suitors include Virgin Money, which is set to be taken over by Nationwide in a £3bn deal.
Even more companies, such as Royal Mail parent company International Distributions Services and music licensing company Hipgnosis Songs Fund, are receiving serious takeover approaches.
While hectic periods of mergers and acquisitions are not uncommon, bankers and investors point to a lack of attractive new ways to use capital because the flow of IPOs has been so slow.
Many of the companies that London would have hoped to attract, including private equity firm CVC Capital Partners and chip designer ARM Holdings, chose to list in Amsterdam and New York, respectively.
The perception of London's decline is reinforced by boards' decision to move their existing UK listings to other international exchanges, including TUI Travel and Flutter Entertainment, the gambling group behind Paddy Power, which are reducing their presence on the London market.
The bosses of companies as big as Shell, the oil giant, have also begun to publicly admit their frustration over what they see as a gap between their internal valuation and that which public markets place on them.
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Earlier this month, the boss of E-Therapeutics, a fast-growing but loss-making biotech company, described the London stock market as “broken and closed” as he announced plans to delist it and launch an initial public offering at a later date Aim for New York.
This weekend a government insider said the Dorneywood meeting was important because it would show fast-growing British companies that listing abroad was “not all milk and honey”.
A number of UK-based companies – such as Arrival, Cazoo and Benevolent AI – which went public in Europe and the US during the now-fading boom for special purpose acquisition companies – have seen valuations collapse and some have subsequently delisted .
“We need to explain to companies why the London capital markets are the right place for these companies to go public,” a government source said.
A Treasury spokesman said: “The Chancellor is meeting with a range of businesses to hear their thoughts on the UK markets and what more the government and regulators can do to support their growth.”