Supporting companies at every stage – the key to London’s success
London’s historic and future success as a capital market hinges on its ability to nurture and support businesses at every stage, from start-ups to publicly listed growth companies, mid-caps and global blue chips.
Raised in London 2024 surveyed company leaders across the full range of listed businesses, from AIM to the FTSE 100. While there was much in common, there were also some distinct and interesting differences in their outlooks and boardroom focus areas.
All companies are optimistic, some are more optimistic than others around certain themes
Companies of all sizes were upbeat about London’s prospects, but the degree of optimism varied. Among leaders at FTSE 100 and 250 companies, 87% and 89% (respectively) expected UK IPOs to increase over the next two years. Among AIM companies, this expectation was still in the majority, albeit slightly less emphatic, at 74%.
A similar picture emerged on secondary offerings, with 87% of FTSE 100 leaders and 93% of FTSE 250 leaders expecting an increase. Again, AIM leaders were also upbeat, though slightly less so at 76%.
When it came to the outlook for UK pensions allocations to UK equities, the majority of companies in the FTSE 100, 250 and AIM were upbeat, with between 74% and 82% of leaders across all three of these indices expecting such allocations to increase over the next two years. In this case, the only outlier was the figure for the rest of the FTSE – that is, companies in the FTSE SmallCap and Fledgling indices. While still positive, just 60% of leaders in this group said they expected pension allocations to UK equities to increase.
Overall, larger companies were somewhat more positive around future UK pensions allocations than AIM and other companies not in the FTSE 100 or 250. There could be multiple reasons behind this, many depending on the circumstances of individual businesses, but it does indicate that policies aimed at boosting London should not focus solely on high profile indices that garner headlines, but also on supporting companies across the full breadth of the market.
Pinch-points and priorities
In the life-cycle of a company, different challenges arise at different phases of growth, while other challenges are familiar to all businesses. Raised in London 2024 highlights both the common concerns and the distinct pinch-points in each index.
All the company leaders in our report would like to see a greater focus on recruitment/retention of staff, which was the top constraint on their strategic ambitions in every index. However, this was highest for larger companies (FTSE 100 and 250), at 35% and 38%, respectively.
The ability to offer competitive remuneration was notably more important for FTSE 100 companies, cited by 32%, compared with just 16% and 20% at FTSE 250 and AIM companies, respectively. This greater emphasis on recruiting/retaining talent and on remuneration among the most established companies is likely to reflect their need to compete on a global stage.
However, the pattern was reversed when it came to access to funding. Just 8% of FTSE 100 leaders said this was a constraint on their ambitions, compared with a markedly higher 16% for FTSE 250 leaders and 24% for AIM. Smaller companies can find it more difficult to secure financing and this is reflected in their responses.
These variations highlight the need for a UK capital market that supports the needs of a wide range of businesses, from growth companies to global giants.
Our findings on public policy and what companies felt should be the top priorities for the new government also generated some common themes along with some distinct interests.
Streamlining corporate governance was named as a priority by more than half of respondents regardless of their index, although this sentiment was strongest among FTSE 100 companies, at 68%. Similarly, encouraging more pension fund investment and boosting the UK tech sector were high priorities for companies across all indices, and both of these issues are reflected in the report's key recommendations.
But in some cases companies from different indices wanted to see different areas brought into focus. More than half of those surveyed said a stable economy should be a priority for the UK government (at 58% for the FTSE 100 and 61% for the FTSE 250), but among AIM company leaders this was much lower, at just 34%.
AIM leaders put a higher emphasis on further regulatory reform to make listing easier – a priority for 42% of AIM leaders and much higher than the 25% of FTSE 100 leaders who wanted to see this. While economic stability matters for all businesses, it may loom larger for established companies where growth can be more closely connected to the wider economy, while early-stage companies are likely to see their growth as more dependent on their own capacity to innovate, disrupt a market or by acquisition.
All companies are key
The overwhelming message from Raised in London 2024 is one of optimism for London’s future. Many areas where company leaders would like to see greater focus are common to companies of all sizes. However, our research also reveals some distinct areas of focus for companies at different stages of growth and scale.
Maintaining London’s competitiveness as a capital market will require attention to the full range of priorities for companies across the indices, while also recognising the specific issues that affect some companies more than others. This will help ensure London has a market that supports businesses at every stage of their life-cycle.
The UK’s investment banks must listen closely to the demands and expectations of their clients. London’s reputation for strong and effective advisory services has always been one of the keys to its attraction as a financial hub and innovation in those services is vital if London is to maintain its global status.
Melanie Saluja, Managing Director, Investment Banking, Deutsche Numis
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London’s historic and future success as a capital market hinges on its ability to nurture and support businesses at every stage, from start-ups to publicly listed growth companies, mid-caps and global blue chips.
Raised in London 2024 surveyed company leaders across the full range of listed businesses, from AIM to the FTSE 100. While there was much in common, there were also some distinct and interesting differences in their outlooks and boardroom focus areas.
All companies are optimistic, some are more optimistic than others around certain themes
Companies of all sizes were upbeat about London’s prospects, but the degree of optimism varied. Among leaders at FTSE 100 and 250 companies, 87% and 89% (respectively) expected UK IPOs to increase over the next two years. Among AIM companies, this expectation was still in the majority, albeit slightly less emphatic, at 74%.
When it came to the outlook for UK pensions allocations to UK equities, the majority of companies in the FTSE 100, 250 and AIM were upbeat, with between 74% and 82% of leaders across all three of these indices expecting such allocations to increase over the next two years. In this case, the only outlier was the figure for the rest of the FTSE – that is, companies in the FTSE SmallCap and Fledgling indices. While still positive, just 60% of leaders in this group said they expected pension allocations to UK equities to increase.
Overall, larger companies were somewhat more positive around future UK pensions allocations than AIM and other companies not in the FTSE 100 or 250. There could be multiple reasons behind this, many depending on the circumstances of individual businesses, but it does indicate that policies aimed at boosting London should not focus solely on high profile indices that garner headlines, but also on supporting companies across the full breadth of the market.
Pinch-points and priorities
In the life-cycle of a company, different challenges arise at different phases of growth, while other challenges are familiar to all businesses. Raised in London 2024 highlights both the common concerns and the distinct pinch-points in each index.
All the company leaders in our report would like to see a greater focus on recruitment/retention of staff, which was the top constraint on their strategic ambitions in every index. However, this was highest for larger companies (FTSE 100 and 250), at 35% and 38%, respectively.
However, the pattern was reversed when it came to access to funding. Just 8% of FTSE 100 leaders said this was a constraint on their ambitions, compared with a markedly higher 16% for FTSE 250 leaders and 24% for AIM. Smaller companies can find it more difficult to secure financing and this is reflected in their responses.
These variations highlight the need for a UK capital market that supports the needs of a wide range of businesses, from growth companies to global giants.
Our findings on public policy and what companies felt should be the top priorities for the new government also generated some common themes along with some distinct interests.
Streamlining corporate governance was named as a priority by more than half of respondents regardless of their index, although this sentiment was strongest among FTSE 100 companies, at 68%. Similarly, encouraging more pension fund investment and boosting the UK tech sector were high priorities for companies across all indices, and both of these issues are reflected in the report's key recommendations.
But in some cases companies from different indices wanted to see different areas brought into focus. More than half of those surveyed said a stable economy should be a priority for the UK government (at 58% for the FTSE 100 and 61% for the FTSE 250), but among AIM company leaders this was much lower, at just 34%.
AIM leaders put a higher emphasis on further regulatory reform to make listing easier – a priority for 42% of AIM leaders and much higher than the 25% of FTSE 100 leaders who wanted to see this. While economic stability matters for all businesses, it may loom larger for established companies where growth can be more closely connected to the wider economy, while early-stage companies are likely to see their growth as more dependent on their own capacity to innovate, disrupt a market or by acquisition.
All companies are key
The overwhelming message from Raised in London 2024 is one of optimism for London’s future. Many areas where company leaders would like to see greater focus are common to companies of all sizes. However, our research also reveals some distinct areas of focus for companies at different stages of growth and scale.
Maintaining London’s competitiveness as a capital market will require attention to the full range of priorities for companies across the indices, while also recognising the specific issues that affect some companies more than others. This will help ensure London has a market that supports businesses at every stage of their life-cycle.