Ahead of the Australian Investment Summit in London on July 10, Stockhead caught up with the London Stock Exchange’s Tom Attenborough to learn why listing on the exchange could benefit Australian companies.
Tom Attenborough is the exchange’s Head of International Primary Markets. And as such, he works with existing listed companies and potential issuers thinking about listing and raising capital on the London markets from all around the world.
Attenborough refers to the dual listing of ASX companies on the London Stock Exchange as a potential win-win situation, with Australian companies often seeing a significant boost in liquidity on the home market after the addition of a London listing.
About the London Stock Exchange
First up Tom, can you give us a bit of a rundown on the London Stock Exchange, and why it’s still regarded as one of the world’s top exchanges some 326 years on from its early beginnings in 1698?
Tom Attenborough: Certainly, the first thing to note is that the London Stock Exchange remains the leading European stock exchange by pretty much any metric and is currently fifth globally for capital raised in 2024 behind just the US and Indian exchanges.
For example, London has seen almost $24 billion of IPOs and follow-on capital raised this year, well over three times that of the next European exchange. And so far this year, London has seen the second and fourth largest equity offerings globally, taking London’s capital raising to more than that of the next four European exchanges.
Additionally, our bond markets continue to grow and be an important source of funding for innovative issuers across the world, and we continue to be the premier ETP listing and trading venue in Europe.
What sort of direction has it been taking with regards to international companies?
Well, we’ve long been a very global market, and in fact, we’re the most international exchange in the world, with 36% of the companies on our market international.
And this is also reflected in the flow of new companies to the London market this year. Of the eight IPOs in London so far this year, five are international; one is from Kazakhstan, one from Sweden and three from the US.
Our pipeline is extremely international in nature, too, as is our business development team – with a team in Beijing, Singapore, Delhi, Dubai, Tel Aviv, Vienna and New York as well as London.
What other competitive advantages does London have?
We own leading platforms across asset classes with clear advantages. These include heritage and long-term trust – we are Europe’s most active equity market with more than 300 years as a trusted venue for capital raising.
Then there’s the geographical advantage, with location and time-zone bridging Asia and the Americas. And we have a respected legal system, which also helps to attract a deep pool of international capital and the largest percentage of international issuers of any major exchange.
Also, London is a global leader in product innovation – for example, in sustainable finance, the recent admission of crypto ETNs, plans to launch a digital market ecosystem, and the development of the world’s first regulated crossover market, which will allow private companies to periodically access public market liquidity for shareholders while remaining private (see further info. below).
Is there much interest from UK investors in Australian companies?
And adding to that, what are the benefits for Aussie companies listing or dual listing on the London Stock Exchange?
TA: Australian companies are typically well received in the London markets. Right now, there are 43 Australian companies already listed in London.
Most have maintained a listing on the ASX as well, while some have moved to a sole London listing.
These companies range from large resources and energy companies in need of the greater depth that London can provide through to growing tech companies in need of greater research coverage than they might receive in just the Australian market.
And with the benefit of similar legal systems, obviously the English language, and well-developed plumbing, dual listings and sole listings in London have certainly performed well in the past.
Also, crucially, with almost three times the dedicated assets under management of the ASX, the London Stock Exchange provides access to both new incremental institutional investors interested in certain sectors that invest via London, as well as retail investors. Both have an appetite for, and are able to access, Australian companies via London.
What ASX stock sectors are you seeing interest in from UK investors?
TA: Quite a number of Australian companies listing in London over the years have been in resources and energy. And recently in particular we have seen companies supporting the green economy transition, such as critical minerals, battery metals, rare earths, and battery recycling.
Alternative fuels such as hydrogen, too, are areas where I think Australia can produce on a massive industrial scale.
We’re seeing companies in these areas look at London and get a good response here. And we’ve seen companies in other niche areas too, like litigation finance with Litigation Capital Management, which was admitted to AIM (London’s Growth Market) a few years ago. It was ASX-listed and then moved to concentrate their primary listing in London.
But I’d say the biggest areas for us in terms of prospecting have been resources driving the green economy transition, battery metals, rare earths, and other green economy businesses. These companies see London as a home for those kinds of things and the Green Economy Mark as a badge that can be clearly identified for investors, and they come over and raise capital on that basis.
There are some very long-standing successful large dual listings from Australia with a healthy portion of liquidity in both markets, and even small-mid cap businesses have been able to make dual listing programmes work, especially when there is an obvious angle to why they have sought the dual listing, be it proximity to assets, customers or other strategic reasons.
What criteria does the London Stock Exchange use when identifying and assessing suitable candidates for listing?
TA: Although the London Stock Exchange will market to companies and set out what is possible in London, introduce the process and discuss examples of companies that have performed well on the London Stock Exchange, it is for the companies themselves and their advisers to drive the decision on a listing.
Given the importance of the ecosystem in reaching this decision, it’s really important to get the right advisors that understand a companies’ size, sector and prospects and whether it’s something that investors are looking for.
London does not have a one-size fits all policy and provides different markets suitable for different companies, such as AIM, our growth market, which has been good at attracting specialist small cap institutional investors in its near 30-year history.
We are also doing more in the private company realm, using our position in the ecosystem – so we can support companies throughout their life cycle.
What initiatives does the London Stock Exchange have in place to enhance liquidity for dual-listed ASX companies?
TA: Liquidity in London is often compared to the US as being lower, because of course, trading volumes on the US markets on an absolute basis is so vast.
But in fact, London’s liquidity is very strong, meaning that a company in the FTSE100 enjoys daily volume as a percentage of its free float very much in line (actually slightly higher) than the equivalent figure for the S&P 500.
Liquidity is something we spend a lot of time focused on trying to broaden access to, be it to institutional money globally, or whether it’s actively promoting retail distribution within the UK – both in primary transactions and in secondary markets.
I think a crucial point to make, though, regarding the ASX companies, is if they add a London listing, it’s not just about the additional volume they get through the London listing.
What’s interesting is about what happens to the domestic liquidity on the ASX by just having more people funnelled in and looking at a stock.
Actually, we did some analysis on this in the recent past which looked at companies who had added a London listing and looking at the volumes on the original domestic exchange six months before they added London listing, and then six months after.
We saw approximately a 61% increase in the weighted average liquidity on the home market after also listing in London.
Essentially, the way we look at it is, this should be a win-win, positioning a dual listing in London as one where you can have a bigger shop window and wider access to investors, ultimately creating more liquidity, and ultimately FDI into Australian companies.
And how do you go about helping to maintain visibility for ASX/international companies on the London Stock Exchange?
The other thing we’re doing is spending a lot of time focused on Issuer Services – it’s probably the fastest growing team within our primary markets business. That support for our listed companies comes in a variety of ways, for example through data, access to research and profiling, or it could be through tools to enhance investor engagement and keep companies close to the ecosystem.
Once listed, we aim to make sure companies have all the tools they need to maintain their visibility with the investor base here.
Anything else to note coming up for the LSE?
TA: What’s coming just around the corner is quite significant – and that’s a set of changes to our Main Market listing rules, due to be implemented in July 2024. This is part of a broader reform agenda in London and represents the biggest changes to the listing rules for 40 years.
There will also be a new secondary listings segment for international companies already listed on their home or another market.
Overall, these reforms will lead to a simpler, more transparent rules-based approach. With broader reform around corporate governance, pension reforms, research, and more, we are very excited by how London’s markets will look in years to come.
We will also be launching at end of this year the first regulated crossover market within the PISCES (the Private Intermittent Capital and Securities Exchange System) regulatory framework. This will enable private companies to access periodic public market liquidity for their existing shareholders. It is envisaged that this will support both UK and international companies – and will be the first market of its kind globally.
Footnote: Aussie companies on show at the Australian Investment Summit
The London Stock Exchange will be hosting the Australian Investment Summit on July 10, and it aims to give investors/potential investors the opportunity to learn about prominent Australian companies in the renewable energy, mining and tech sectors.
The following three Australian firms are the headlining exhibitors at the event.
Wellnex Life (ASX:WNX)
Wellnex Life’s mission revolves around the development of next-generation health and wellness solutions.
A champion of sustainable practices, the company says it aims to “challenge industry norms and deliver innovative products to consumers worldwide”.
Recently, Wellnex Life announced it’s all set to launch – on July 1 – a new medicinal cannabis brand called Wellness Life.
This, it says, marks “a significant step in providing high-quality medicinal cannabis products to the burgeoning SAS-B market in Australia”.
According to Statista, the medicinal cannabis market in Australia is projected to reach US $356.70 million in 2024, potentially reaching US$446.30 million by 2029.
Constance Iron Limited
Australian-based company Constance Iron Limited’s main game, as its name suggests, is the development and production of iron ore assets.
In particular, the company is focused on two separate projects – Norseman in WA and Constance Range in western Queensland.
Constance Range has a total resource potential of about 700mt and is aiming to begin production in 2028.
The Norseman project meanwhile, predominantly magnetite focused, has a target of commencing production in Q4 this year and also has large exploration potential.
The company notes that its “innovative approach to mining, combined with robust management practices, positions it well for growth in the UK and global markets”.
H2X Global
And speaking to the innovative, green energy-transition factor Attenborough mentioned in the interview above, the event also features H2X Global – a company that specialises in hydrogen fuel cell electric vehicles (FCEVs) and fuel cell electric generators.
This focus, notes H2X Global, makes it a key player at the forefront of sustainable automotive technology, with the company particularly concentrating on “back to base” logistic vehicle fleets, including buses, trucks, delivery vans, and taxis.
H2X Global says its use of hydrogen fuel cell technology enables the production of zero-emission vehicles that offer faster refuelling and longer driving ranges compared with battery electric vehicles (BEVs).
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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