The USA is a marvel in marketing. Where a victor among 30-odd cities and towns can shamelessly proclaim to be ‘World Champion’ of just about any sport. The country which persuaded the British that carving holes into pumpkins was a sensible use of our time. So too has it seamlessly convinced some of the UK’s leading companies to become more bricks in the country’s Wall Street.
Worryingly, meanwhile, the UK has stopped marketing itself. As has our stock market and the stocks themselves. In 2000, UK-listed equities made up 11% of the MSCI World Index — which tracks more than 1,500 companies that account for the vast majority of the global stock market by value. Fast-forward to today and it’s around 4%.
While UK companies appear not to dare to dream of blowing their own trumpets, American companies are seemingly born with their own brass band. Like many aspects of retail, the UK can learn much from the US - and capital markets are no different.
There is talk that there could be a revival in IPOs this year, with fashion giant Shein said to be mulling over the move, which if it did list on the LSE would make it the second biggest London float after Glencore. Chancellor Jeremy Hunt recently met with Shein to push the LSE’s case. But the Exchange needs more than mooted meetings and rumours of a revival – it needs a change in mindset.
If ARM had listed in the UK there is a strong argument it would have stood out as a flagship stock – a European tech megalith. It would have secured more diverse coverage, more press commentary and gained more investors as a result. Its value of $75bn would have crowned it as the number one tech stock in London and placed it comfortably among the City’s top ten listed stocks. Whereas now it is not in the top 120 US listed stocks nor the top 30 US tech stocks. So, why did the company leave?
Well, the Americans market equity ownership far better than we do. There can be no doubt that Tesla would not be the stock market success it is without Elon Musk’s enigmatic and relentless campaign to keep the name on every investor’s lips. Flutter was offered a marketing budget from the NYSE to promote its listing.
It’s the same with private equity. The industry has grown from $5bn AuM in 2000 to around $7.5tn today. It has key advantages over listed equities; quicker funding decisions, balance sheet management, incentivisation, and others. But again – the industry is also better at marketing itself, certainly compared to most exchanges including the LSE.
Neither should Europe’s premier financial centre be going cap in hand to Government. Jeremy Hunt’s red briefcase was too swollen with election fodder to have anything substantial to announce
for the City or the LSE. More reforms may emerge over the coming weeks, but we should not bate our breadth in anticipation.
The London Stock Exchange’s demise is in direct contrast to the success of its parent group (LSEG), which carries the same name but data, and not stocks and shares, make up more than 90% of its revenue. Many commentators believe the Exchange is lost, an afterthought in a corporate entity which has its own short-term targets to focus on.
Essentially the LSE needs to stand on its own two feet once more. What London really needs is a swift reminder that equities are tradeable assets and tradeable assets need to be marketed if they are to attract buyers. Brilliance alone does not guarantee share price success. Arguably, this is much more significant than where the stock has its primary listing.
The case for a listing in the US is often said to be about getting a better rating, lower regulation or access to the bigger pools of capital. But this can all be achieved without listing in New York. Instead, the message to the UK quoted community is clear. Investors are out there.
Companies need to be aggressive in finding them, and in selling them their story. Bring them on the journey with you and enjoy it. We are trying to do our bit with our Edison Growth Conference taking
place next month, to bring companies and investors together, with innovation and sustainability key themes.
As Jay Conrad Levinson, one of the fathers of modern marketing and of course an American said, ‘marketing is not an event, but a process.. It has a beginning, a middle, but never an end. You improve it, perfect it, change it .. but you never stop it completely.”
It’s time for the LSE and UK corporates to re-discover the salesmanship that saw the Exchange have a record year for IPOs only three years ago and match their marketing marvel counterparts across the Atlantic.
After all, the meek may inherit the earth but they won’t inherit the City.
Fraser is CEO and founder of Edison Group
