Key Takeaways
- The number of stocks listed on the London Stock Exchange is falling as more private equity firms buy UK companies and IPOs shrink in number.
- Deliveroo was the last big-ticket IPO in London, and the food delivery company was taken private in 2025.
- UK government initiatives have focused on reviving UK listings and diverting investor money to domestic stocks.
Among the many items in the intrays of new Chancellor John Healey and City Minister Lucy Rigby will be how to arrest the UK stock market’s perceived decline, which is reflected in the shrinking pool of listed companies. From Schroders SDR to easyJet EZJ, British companies are being snapped up by US private equity firms and being bought by overseas rivals. Five FTSE 100 companies have already agreed to be taken over so far this year. Others are delisting from London or choosing to float in New York, meaning big-ticket IPOs are non-existent. “At the current rate of M&A, there will be no UK stock market left in 10 years," says one highly rated UK fund manager. How to reverse this trend is a key task for the new UK government, trade bodies, regulators and the fund management industry.
Can More IPOs Revive the UK Stock Market?
Many see reviving the IPO market as a key objective for turning around the City of London.
The Association of Investment Companies, the trade body for investment trusts, has launched a “save our stock market” campaign, and among other suggestions it wants streamlined rules and prospectuses to ease the path for floats. Citing data from broker Peel Hunt, the AIC said that the value of UK-listed companies subject to take over bids was 27 times greater than the value of IPOs (IPOs) in the first half of 2026.
Morningstar PitchBook, in a recent report, said that London has dropped out of the top 20 global IPO venues in September 2025, and the share of UK companies choosing to list domestically has fallen from 71% in 2019 to 46% in 2025.
Big-ticket IPOs are now exceedingly rare. The last was food delivery firm Deliveroo, which floated for £7.9 billion in 2021 but then was sold to US rival DoorDash for £2.7 billion in 2025 after a turbulent period on the stock market. In 2026 so far, the largest UK IPO was the sovereign wealth fund of Uzbekistan, which raised USD 604 million.
Fund managers have previously told Morningstar the IPO drought can only go on for so long. “I think five years without IPOs is OK. 10 years isn’t really,” says Alex Wright, fund manager of Fidelity’s Special Situations fund, which has a Morningstar Medalist Rating of Gold. Clive Beagles, fund manager of the Silver-rated JOHCM UK Equity Income Fund, has previously said that, “at the current rate of M&A, there will be no UK stock market left in 10 years. We’ll have nothing left.”
Why US Outperformance Matters
Another key factor has been the relative underperformance of UK equities versus their US rivals, which have been supercharged by the Magnificent Seven and now AI. 10 years after the Brexit vote, many investors see a political risk premium in UK investing.
International investors have been chasing the best returns and for many years these have been found in US tech companies. The chart below shows the significant outperformance of US equities over a 10-year period. Still, the UK’s FTSE 100 is up around 10% this year, similar to the S&P 500, and is at record highs near the 11,000 points level.
US exceptionalism is one element that’s hard to ignore, and it also makes the New York Stock Exchange appear a more attractive venue to list than London. Many UK success stories such as ARM Holdings ARM have chosen to float there and others, like gambling stock Flutter and fintech Wise WSE, have shifted their listing overseas.
Dan Coatsworth, head of markets at AJ Bell, says that UK company boards often see a US listing as a way of getting a higher valuation for the stock than they would otherwise achieve in London.
Key FTSE Companies Bought Out
- Schroders
- Hargreaves Lansdown
- Darktrace
- Deliveroo
- Tate & Lyle
- easyJet
Why Private Equity Keeps Buying UK Companies
Morningstar PitchBook associate data analyst Charlie Farber says that private equity interest in the UK’s biggest firms remains elevated despite sharp increases in interest rates over the last five years, which makes funding deals more expensive. The London Stock Exchange’s “diminishing competitiveness as a listing venue” has heightened this interest from private equity firms in UK stocks.
“US sponsors have been disproportionately active, treating the LSE as a source of underpriced assets,” he says.
Takeover interest in budget airline easyJet remains live, with a bidding war between two US private equity firms Apollo and Castlelake driving the share price up 20% since the start of the year. Apollo has until early August to make a firm offer or walk away.
Will Tax Changes Help Rejuvenate the UK Stock Market?
Early spending commitments from the new prime minister, Andy Burnham, and his chancellor, John Healey, are being closely monitored, with the contents of the government’s first budget hotly anticipated. Away from changes to VAT on electricity bills and a possible overhaul of property taxation, many hope the Treasury will also take the question of stock market decline seriously.
As chancellor, Healey’s predecessor Rachel Reeves continued with earlier efforts to get UK investors to put money into domestic markets, with pension and ISA reforms at a retail and institutional level last year. It also follows an attempt by the Financial Conduct Authority to simplify the regulatory burden faced by firms hoping to list, a change deemed the biggest listings overhaul in 30 years. The data suggests such policies are needed, but it’s unclear whether they will work, especially as UK pension funds allocate less than 5% to domestic equities, down from 50% in 2001, according to Morningstar PitchBook.
Away from the large-cap index, the UK government may just have made it harder for small-cap stocks to develop into the FTSE 100 giants of the future. From April 2026, inheritance tax relief on small-cap shares on the Alternative Investment Market was cut to 50% from 100%. This has reduced an important source of liquidity for high-growth stocks, industry analysts say, and creates challenges for small companies that could use London’s junior market as a springboard to become FTSE firms. This is particularly evident in the tech sector, says AJ Bell’s Coatsworth. But he argues that a handful of strong UK companies in this industry could act as a “magnet” for more companies to list here.
Is the UK Stock Market Finally Recovering?
Still, Nicolas Moura, the author of the Morninstar PitchBook report UK Exit Market: Dearth or Revival?, says that there is change in the air.
“For much of past few years, the London Stock Exchange has been losing ground as an exit venue […] A combination of structural disadvantages, from persistent valuation discounts to a hampering regulatory framework, compounded the retreat,” he says.
“But the tide may finally be turning with reformed listing rules and new private market liquidity initiatives that together with a more favorable macroeconomic backdrop provide the most constructive conditions for UK public listings in years,” he adds.
