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FTSE 100: London Stock Exchange Group investors selling £2bn stake in secondary share offer

LSEG stock falls as consortium of investors look to sell shares in the fourth-largest stock exchange worldwide. Photo: Getty.
LSEG stock falls as consortium of investors look to sell shares in the fourth-largest stock exchange worldwide. Photo: Getty. (code6d via Getty Images)

Investors in the London Stock Exchange Group (LSEG.L), including Thomson Reuters (TRI) and US private equity giant Blackstone (BX), are selling shares worth about £2bn.

It comes after the two companies, along with others, offloaded about 33 million shares in the exchange in May.

Canada's CPPIB and Singapore's GIC are also aiming to sell about 43.1 million LSEG shares over time, bookrunners said via Reuters.

Read more: UK house prices see biggest annual decline since 2009

Separately, LSEG said it plans to buy back about £750m worth of limited-voting ordinary shares through an off-the-market purchase.

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Following the update, LSEG shares were trading down nearly 2%.

Why are investors selling LSEG shares?

The sell down comes as the exchange has struggled to retain premium listings and win over new ones.

At the beginning of June, for example, CRH, one of the biggest British companies listed on the London stock Exchange (LSE), received shareholder approval to switch its main stock market listing to New York.

Meanwhile, UK-headquartered chip designer Arm, owned by Japan’s SoftBank, whose technology is in 95% of all smartphones worldwide, has also chosen to list in New York only, despite lobbying by the UK government to do otherwise.

Ivelin Stankov, an analyst at Barclays, was among the experts to share a view on it on social media.

“Fears for the future of the London Stock Exchange have rocketed after Softbank, CRH, and Shell have launched plans for leaving the City in favour of New York. The prospective moves from London underline the UK’s difficulty in attracting and retaining companies, despite the British government’s attempts to lure businesses away from rival exchanges,” he said.

Read more: FTSE and European markets pull back amid global equities gloom

He also highlighted how the downward trend has been running for a while.

For example, he noted how LSE’s ranking on the largest stock exchanges list by market cap has fallen from 1st place in the 19th century to 11th in 2022.

He also shared how the LSE weighting on the global stock exchange has fallen from 75% in the 19th century to roughly 3% in 2022.

Furthermore, there’s been a 40% decline in UK IPO listings since the global financial crisis with daily traded volume on the FTSE All-Shares Index dropping about 70% since 2007.

Why is a UK listing less attractive now?

Among economists, the broad sentiment is that the rise of Asia is one contributing factor, with more capital being generated out of britain.

Also, the technology revolution, with the majority of tech majors all listed on the S&P 500 and the Nasdaq in the US.

Furthermore, the US is seen as an environment of higher growth with higher valuations.

Watch: Arm IPO is a 'good barometer' for tech and AI, analyst says

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