The London Stock Exchange is seeing the strongest pipeline of initial public offerings for five years with the exchange expecting “dozens” of company listings in the coming months, according to Xavier Rolet, LSE chief executive.
His comments come as Glencore, the commodity trading company, is preparing to publish final pricing of its flotation due this month. Glencore would be the biggest listing on the British exchange since the flotation of Orange, the telecoms company, in 2001.
Mr Rolet said the LSE’s calendar for IPOs was “pretty full”.
“In terms of both domestic as well as international opportunities, including our sister company in Italy [Borsa Italiana] you are looking at dozens of deals in the coming months.”
London has lost ground to New York this year in number and size of deals, after being overtaken by Hong Kong as the world’s preferred IPO venue last year. This year New York overtook Hong Kong, with 22 deals worth $16bn, to Hong Kong’s 11 deals worth $2.4bn, just behind London, according to Dealogic.
Glencore’s planned $9bn-$11bn IPO could restore lost ground to London, market analysts say.
Asked when the LSE last saw this level of IPO activity, Mr Rolet said: “I think you’d have to go back to the early part of 2006, so we are really in an upswing.
“Clearly there are overhanging macro issues – whether you look at the US, growth in China – so one cannot make predictions, also about what the next shoe to drop might be in the eurozone crisis. But the underlying demand for capital is very strong. And the important thing is that London as a financial centre is fulfilling its mission.”
The LSE is also in the midst of attempting to finalise a combination of its business with TMX Group, operator of the Toronto and Montreal exchanges.
Canada’s Globe and Mail newspaper reported last week that three local banks – Toronto-Dominion Bank, National Bank of Canada and Canadian Imperial Bank of Commerce – have contacted some Canadian pension funds about a possible joint counter-bid for TMX.
Opponents of the LSE-TMX deal say it is not a “merger of equals” and that it amounts to a takeover by the LSE. Mr Rolet and his counterpart at TMX, Thomas Kloet, have pointed out that the combined company would have joint headquarters in London and Toronto and the board would be made up of seven Canadians, five UK directors and three Italians, from Borsa Italiana.
Asked about the possibility of a counter-bid orchestrated by the Canadian banks, Mr Rolet said: “If there is another project out there that materialises we will see what it is. I think it will also highlight the benefits of our transaction. It is an exchange-to-exchange transaction which is by definition neutral. And the concept of certain clients or constituencies controlling an exchange raises a whole host of other questions.”
The LSE on Monday submitted its application to the Quebec securities regulator. That came after the two exchanges on Friday filed their merger application with federal authorities in Canada, as required under the Investment Canada Act.
“We feel the project is a strong one and we’re going to continue to prosecute it vigorously,” Mr Rolet said.
Mr Rolet was speaking as George Osborne, UK’s chancellor of the exchequer, marked the start of the day’s trading by activating a new electronic “market opening” ceremony involving ticker tape displays installed in the lobby of the LSE’s headquarters in Paternoster Square.
While the LSE, like Nasdaq, long ago closed its trading floor, it has modernised its “opening bell” ceremony partly as a marketing tool. The New York Stock Exchange maintains its floor and the opening bell ceremony for the same reason.
Mr Rolet said: “We operate in a very competitive environment for the international IPO market with other exchanges around the world and it was fitting that we modernise and upgrade our market opening ceremony.”