Going Public – Our role in an IPO
London Stock Exchange is one of the oldest exchanges in the world. Today it’s part of a much bigger Group, LSEG (London Stock Exchange Group). Through a comprehensive suite of trusted financial market infrastructure services – and our open-access model – LSEG provides the flexibility, stability and trust that enables our customers to pursue their ambitions with confidence and clarity.
Through our historic exchange, IPOs (Initial Public Offerings) have been a big part of what we do for centuries. We caught up with Ayuna Nechaeva, Head of Europe Primary Markets, to find out more about the role London Stock Exchange plays in an IPO, why companies choose us and the impact this has on the global financial markets and beyond.
What is your role in the IPO process and when do you get involved?
It’s the job of my team to ensure the companies that are considering going public know about London Stock Exchange’s offering and how our markets can support them in the next stages of their growth. We’re also responsible for looking after over 200 listed companies from across Europe and Russia, worth over a trillion US dollars.
My job involves doing a lot of prospective work and building a pipeline of prospective IPOs, so typically by the time a company lists with us I’ve already been working with the management teams for months; perhaps even years. An IPO is a complex process and by engaging with businesses early we can start guiding them on what's required from a regulatory standpoint, as well as the available routes to market. We also act as a sounding board to ensure that the company chooses the right instrument, the right market and the right timing for their listing.
The whole process – from the decision to list with us to meeting regulatory approval and marketing to investors – typically takes between six to eight months, but it can be longer if more time is needed to get the business into the right shape and structure to make it attractive to investors. We continue a dialogue with the company throughout to ensure everything runs smoothly and efficiently.
Why do companies choose London Stock Exchange for their IPOs?
I love this question, because this is my bread and butter! We’re proud to have a very diverse group of issuers from all sectors that are listed and traded on our market. In fact, we’re the most international exchange in the world, based on the number of non-UK businesses listed. London Stock Exchange provides access to a very deep and liquid pool of capital, global investors and – through our sophisticated infrastructure – efficient access to the market.
We also have a robust regulatory framework and high standards that protect investors while being flexible enough to allow companies to join the market in a smooth fashion. Our timezone is another advantage, because the London business day overlaps with that of other financial markets around the world.
As a truly international Group we can offer an integrated suite of products and services to our clients too; not just IPOs and listings. The acquisition of Refinitiv has created even greater scope for this in terms of data and analytics solutions.
What societal impact does an IPO create?
Companies go public to gain market value; to become more transparent and attractive to potential investors, partners and customers, and ultimately to raise the capital they need to grow. This leads to innovation, creates jobs and contributes to GDP, and it’s especially important for SMEs which don’t necessarily have big investor bases or want to take on debt to fund their growth.
During times of financial stress – such as the aftermath of the 2008 financial crisis or resulting from the pandemic – the capital markets are critical. Over the past year, we’ve seen a significant increase in further capital raises by companies that are already on the market. Those companies have been able to use the market to tap into their existing investor base and raise crucial capital to keep afloat and invest in their continued growth. That’s why it's so important for London Stock Exchange to maintain a robust infrastructure and keep the markets open, so that businesses continue to have access to the funds they need.
I’m very proud of what we do here and there’s a definite element of positive social impact – it’s one of the main reasons why I’ve been doing what I do for so long. We’re not just crunching numbers and moving money from A to B – what we do is actually about adding value.