The london stock exchange welcomed its largest new entrant in over a decade on July 18th. GlaxoSmithKline (gsk), a pharmaceuticals giant included in the ftse 100 index of leading shares, is spinning out its consumer health-care division, in order to focus on developing new drugs and vaccines. Each of gsk’s shareholders received one share in Haleon, the new firm, for every gsk share they owned. Haleon started trading with a market capitalisation of a little over £30.5bn ($36.4bn).
The listing is emblematic of the travails of a stockmarket whose best days are behind it. Haleon is the bourse’s largest debut since Glencore, a mining giant, joined the lse in 2011. This, however, is not a fast-growing technology or life-sciences firm. It is a long-standing business selling Sensodyne toothpaste and smartly packaged ibuprofen. Haleon is not attempting to raise any new funding by listing, which may be just as well: Britain’s stockmarket has accounted for less than 1% of the capital raised in global initial public offerings so far this year. The largest firms that have listed in London in recent years have been dwarfed by those choosing New York or Hong Kong instead (see charts).
Why has the City’s appeal dimmed? One big reason is the departure of long-term capital. Twenty years ago British defined-benefit pension funds had around half their assets in London-listed equities; today the share is less than 3%. Another is that tech firms worry City investors are too focused on short-term profits to take their businesses seriously, so they prefer to list elsewhere instead. The lse and its regulator are tweaking the rules to make the exchange more attractive, but they can do little about the attitudes of those trading on it. Pass the Advil. ■
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Haleon's listing shows the woes of the London Stock Exchange - The Economist
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