MAGGIE PAGANO: Two IPOs in two days gives the City a much needed boost

A resurgence of confidence: But are the floats by WE Soda and CAB just part of a lucky streak for the City? asks MAGGIE PAGANO

They say luck comes in threes. And so it seems. After the news that Turkish soda ash producer, WE Soda, is listing on the London Stock Exchange (LSE) comes the decision by tech unicorn, CAB Payments, to head for the capital’s main market.

The third boost is that US tech giant Palantir has chosen the UK as its European HQ for AI developments.

Rishi Sunak will have been delighted to hear Palantir’s chief executive, Alexander Karp, wax lyrical about how Britain’s ‘pragmatism about technology’ was one of the main attractions in choosing London – as well as being a magnet for so much talent.

We are not used to so much praise but it will have gone down well, particularly as the Prime Minister is pushing for London as the site of a new global AI regulator – a body modelled on the International Atomic Energy Agency.

The decision by Sutton-based CAB Payments – otherwise known as Crown Agents Bank – to float in London is significant.

London calling: Turkish soda ash producer, WE Soda and UK tech unicorn, CAB Payments, have bot chosen the City for their IPOs

London calling: Turkish soda ash producer, WE Soda and UK tech unicorn, CAB Payments, have bot chosen the City for their IPOs 

It’s a sophisticated business, one that handled around $30billion (£23.9billion) of payments last year, providing B2B cross-border payments and foreign exchange services between 150 countries.

Unusually for so many fintech companies, it’s profitable too and likely to be valued at over £1billion. Yet much of the recent criticism of London was that its public markets were less well-suited to tech companies than the New York exchanges.

Supposedly, this was because of the lower valuations put on tech businesses in the UK by investors than in the US.

Indeed, it was given as one of the main reasons why SoftBank opted to float the semiconductor giant Arm in New York rather than London.

London’s lack of liquidity compared to New York is often cited as another hindrance. CAB’s chief executive Bhairav Trivedi does not appear to share such fears. Quite the reverse.

The Wharton and Stanford-educated engineer, who has spent more than three decades in the finance industry, says that while CAB did look at other markets, it decided the LSE was the best option on several fronts, including being close to home and having great pools of liquidity.

And here’s one for the declinists: Trivedi added that he is extremely bullish for the UK economy and has confidence in Britain as the home for innovative and growing global businesses.

But are the floats by WE Soda and CAB just part of a lucky streak?

Or a sign of a big mood shift?

One IPO may be pure chance but two coming together one day after the other like this rather suggests that we are at last seeing proper signs of a resurgence of confidence in London’s capital markets.

Admittedly, it’s had a bad run: IPOs fell to their lowest level in a decade last year, with only 41 firms listing on the main market.

Yet there does seem to be a shift in mood, spurred on by the huge efforts of regulators and politicians to speed up reforms, such as Jeremy Hunt’s recent Edinburgh ones to improve access to the markets.

The decision to permit companies to sell fewer shares for a free float also seems to be having its effect. WE Soda and CAB have indicated they will sell between 10 per cent and 15 per cent of their shares, a decent enough chunk to show their commitment. 

And both have indicated more might be made available.

City minister Andrew Griffith is right to say the ‘armchair generals’ should stop sniping. They should start celebrating instead. It’s better for the soul.

More homes

The housing market is in trouble. Prices are falling, there are not enough being built and mortgage payments are about to rise.

Now the boss of Crest Nicholson wants the Government to step in to support the market – as it did for first-time buyers with Help to Buy – because of this weakness.

This is upside-down thinking, a policy that distorts the market rather than improves supply.

Instead, Crest’s Peter Truscott and fellow housebuilders should be urging ministers to give up the ridiculous pandering to ‘NIMBYs’ and force councils to allow more building. Even then, the private sector does not have the capacity to build anywhere near enough homes for our children and grandchildren.

There’s only one way to achieve critical mass: to restore some form of state scheme last seen in the 1970s, when more houses were built each year than now.

Read More

Leave a comment

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More