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00:00And Dame Julia, thank you so much for making time for us today.
00:03Thank you for having me.
00:04You've got a tough job.
00:06Falling football, yes.
00:09I mean, about London listings.
00:11We've got a string of takeovers recently.
00:14We've seen a lot of big companies choosing elsewhere to list.
00:18And on this stage, we've seen a lot of excitement.
00:21So I'm wondering how we can revive the animal spirits in public markets in London,
00:25especially when we've already heard some quite big talk from private equity.
00:29On this stage as well.
00:31So should we start by talking about what you see as the biggest challenge to getting companies to choose London for listing?
00:38Well, I think let me tell you what I thought the biggest challenge was four years ago when I took the job and what I think it is today.
00:44The challenge we had four years ago is that we actually had a regulatory set up and a set of listing rules and an ecosystem
00:51that was not best placed to support the companies that were now the drivers of value in the modern economy.
00:56We had a set of listing rules that worked very well for what I might describe as companies with fixed assets that threw off a certain amount of cash.
01:06You know, past performance predictor of future performance.
01:08Less good for IP-based companies and fast-growing companies.
01:12Fast forward to today.
01:13We've reformed our listing rules.
01:14We've reformed our research rules.
01:16We've increased the conversation about pension investing and retail investing in the UK.
01:20We've transformed our corporate governance and stewardship landscape and created the world's first regulated crossover market between the private and public markets.
01:28So all of that means that actually kind of toe-to-toe with any market in the world, we have a compelling proposition.
01:34I think the narrative, and I'm going to say this once but I'm not going to say it again,
01:39the reporting about the narrative is actually out of date with the reality.
01:45So when, I mean, we see this with the clients who are being advised at the moment, put any listing jurisdiction side-by-side with London,
01:53particularly if you're a company sort of 20 billion and below in size, London wins, hands down.
01:59Well.
01:59And that's what we're now promoting.
02:01So Bloomberg's just reported this week that London has slipped out of the world's top 20 IPO markets,
02:07and this is based on deal volume, so down 69% this year to $248 million.
02:13It's the weakest in 35-plus years.
02:15I'm wondering, when you're looking at rivals internationally, are you looking at the US as the top rival because of the deeper pools of capital,
02:23the higher valuations, or are you more concentrated on Europe?
02:27Are you looking at Stockholm, Amsterdam, Paris?
02:30So I'm looking at a different set of numbers than those.
02:33I think that's the first point.
02:35So we talk about IPOs and I get it.
02:37Our biggest competition is with the US, by any measure.
02:41We're two and a half times larger than the next European exchange in total capital raise this year.
02:46Okay?
02:46There have been 19 companies that have come to London this year that have increased the market cap by 45 billion.
02:53Okay?
02:53Now that's not in that reporting.
02:55I understand why not, because it looked at IPO numbers.
02:57But one of our biggest was the movement of a Greek company, Methlen, from the Athens Exchange,
03:02where they reincorporated in the UK, relisted their securities in London, and then came straight into the FTSE 100.
03:08Okay?
03:08They didn't need new cash.
03:10So they didn't have an IPO, and therefore they didn't count in those stats.
03:14And therefore what we focus on is the total amount of capital raised.
03:19And I'll give you a couple of other stats which are, again, not widely understood.
03:23AIM had its largest ever capital raising this year.
03:25But Rosebank raised over a billion pounds to buy a US company from under the nose of private equity.
03:32Okay?
03:33So there is actually a lot of strength.
03:35Now, we actually, tonight, there is a US company that is doing the first ever dual listing in NASDAQ in London simultaneously.
03:43They are closing the market in NASDAQ and flying over here to open the market tomorrow morning.
03:46And that's a $13.8 billion company.
03:49And we've got another British company IPO-ing on Friday.
03:52So the simple reality is that actually there's a lot of activity happening.
03:56We look at our total size of capital raised year on year versus other jurisdictions.
04:00And the only place where we really have to compete now is the US.
04:04So we report facts, put the journalism aside.
04:07This narrative, this negative narrative, why isn't it being turned around?
04:13Why isn't the vibe more positive?
04:15Is it because of companies themselves, CEOs?
04:17Is it politicians that aren't making the story more positive?
04:21Look, I think the onus is on us and on me, which is why you see me out pretty much every evening having this kind of conversation.
04:29To make sure people understand the facts.
04:33And narratives are hard to pop.
04:35We have a uniquely British habit of talking ourselves down and a uniquely British habit of talking about secular trends as particular to the UK.
04:44So, I mean, you may have seen that Jamie Dimon becried the decline in the total number of listed companies in the US.
04:49And his last shareholder, not this one, but the one before.
04:52That trend has happened in terms of take private in the US as much as it has in the UK.
04:59And yet we talk about it as a uniquely British thing.
05:01I think there is one thing we have to acknowledge, though, which is that the UK had a position as the largest financial centre as a consequence of being in the single market.
05:10We were the default choice as a consequence of being in the single market.
05:14Our listing rules and our rule set hadn't really changed because it hasn't really needed to.
05:19What has happened over the course of the last five years is actually a sharpening of focus on how to make sure we have the most compelling proposition that we can.
05:26But narrative lags reality.
05:29And our job is to make sure that it's reported accurately and that that positivity comes through.
05:34So when you're selling London to an individual company, I'm thinking about Revolut, homegrown London success story.
05:40And I know you don't want to talk about individual companies.
05:42But what are your tactics to try and get a Revolut to choose London over New York?
05:47The facts.
05:48Do you wine and dine them with the facts?
05:51Well, we I think I said on Bloomberg TV, I think I may have been the first person who ever quoted Lin-Manuel Miranda on The Breakfast Show.
06:00But I said we have to be young, scrappy and hungry in terms of how we fight for every listing where we feel we have a compelling proposition.
06:06And for the UK fintechs, we feel we absolutely do.
06:11And I'll give you a reason.
06:12It's not only that our rule set and our the analyst understanding and the fact that you can get into the FTSE immediately, you wouldn't get automatic tracking in the US is all very compelling.
06:23The other thing is actually the US markets demand companies inexorably move their center of gravity to the US, which is why as a nation we should care that we keep companies listed here.
06:33But I mean, so that's one piece of it.
06:36The other piece, I'll give you some simple data.
06:39There have actually been only 20 UK companies who've gone to the US to raise over 100 million since 2014.
06:46Of those, 10 have delisted, only three are trading up and seven are trading down by on average 74 percent.
06:52So the grass is not always greener.
06:54And I think it's also important that people realize what the proposition is, what the costs associated with listing in the US are, what the litigation risk associated with listing in the US is versus what companies can get here, where they get indexation, they get the support, they get the home nation status, all of those things.
07:11So I think we just need to make sure we get that across.
07:14It isn't always in the economic interests of some advisors to give that message because the fees are higher to list in the US.
07:22I get that.
07:23So are your tactics the same when you're trying to persuade a company not to delist from London?
07:28Because we just lost Peters Hill, for example, last week.
07:32Yep.
07:32Look, I think companies will make, and this is the thing I feel, I mean, I feel it as a CEO of a company.
07:38I felt it when I was running a bank.
07:40You have to respect the strategic agency of any company.
07:44My job is to make sure a company has the best possible information to make the best possible decision.
07:48And one of the things we do have to make sure is that companies feel that they're getting the right support on the market.
07:54Now, there are times, and I think I may be pivoting to one of the things you want to talk about, but there is the delisting issue.
08:01And it is an issue both in the US and in Europe and elsewhere around the world.
08:05And, look, I did something that I think was quite different to what a lot of CEOs of exchanges did when I arrived, which is to say, rather than public markets from Mars, private markets from Venus, ne'er the twain shall meet, and we sort of have to go like that about the idea that private markets are evil.
08:21I have a very different attitude to it, which is that actually the most important thing stock exchanges do is as a convener.
08:27Our job is to bring together those who have capital with those who need capital in service of an objective.
08:32And most importantly, that's to facilitate founders being able to drive value creation in their companies.
08:38And if you think that's what venues do, we're a great big network effect.
08:42So I used to say we're Facebook before Facebook was Facebook.
08:44Then our job actually could be applied across the suite of companies' life cycle, not just when they're public.
08:50It's just that's all we'd ever done before.
08:52So we want to make sure that we can engage and support companies to get access to liquidity at every stage of their life.
08:58But it's also a recognition as public markets, and it's not just for the UK, everywhere around the world, that our greatest competition now is actually probably not each other.
09:07It's actually the proposition in the private markets.
09:10And therefore, the public markets have to look at themselves and make sure they are as compelling a proposition.
09:16The UK has done that in a way that most other jurisdictions have not, I think.
09:20So this is Pisces, the Private Intermittent Securities and Capital Exchange System Regulation, where they are as silent.
09:29Much catchier, Pisces.
09:32Pisces.
09:32What I want to know is what kind of companies you want to take part, and when we're going to see the first transaction under Pisces.
09:38So let me explain what Pisces is.
09:40It's the world's first regulated crossover market between the private and public markets.
09:44What it enables a company to do as a private company is have an auction of their secondary shares at a period of their choosing.
09:51And the design is aimed to enable those Mansion House Compact and Accord companies who've signed up to commit more of our UK pension fund money to private companies to be able to use their existing pipes and plumbing to be able to buy the company.
10:02It's to enable angel and seed investors to get out with a transparent price formation process.
10:06It's to enable companies to scroll through the VCs and the PEs.
10:09So if you need somebody to write a ticket that your current cap table can't write in size, then you can actually generate that liquidity event.
10:15And crucially, it's to provide liquidity for staff to facilitate the ability to retain talent.
10:22Now, the UK is doing unique things, which is looking at the shape of its capital markets and saying, how do we maximize the efficacy of the economy that we want today and tomorrow, rather than this is how we've always done it?
10:33So the honest answer to your question of what size of company is, it varies enormously from companies who are, I'd say, 200 million market cap to tens of billions in terms of who's looking at it.
10:47In terms of when I anticipate the first transaction, I mean, literally, we only got our license to operate this market last month.
10:54So let's bear that in mind.
10:57I would say I run a 300-year-old fintech, because I do.
11:01But also, this job is a five-year, five-year forward.
11:04In other words, it takes five years to build a market and then five years to cement a market.
11:07But the simple reality is, I think we'll see companies in the first half of 2026, because the preparation is, I mean, this goes to company agency.
11:16It actually is a serious amount to actually kind of change your articles association and get all your legal documents in the row to make sure you can access this market.
11:25But we are seeing a steady sign-up of what are called the registered auction agents, the banks that will facilitate those flows for the companies.
11:31We're kind of, we will be making some very big announcements in the coming days about the investors who will be able to access that market.
11:37You can meet, yeah.
11:38Nope.
11:39I'm giving you a trail.
11:40I'm not giving you the headline, because I can't do that yet.
11:43But the simple reality is we're seeing massive momentum build.
11:46And the thing I'm fascinated by is we went into this with a, how do we solve these challenges for private companies, CEOs and founders?
11:54But now that we've built it, the founders are coming back to us with use cases, as are the P's and the VC firms as well, and saying, we want to use it this way.
12:04Can it do it that way?
12:06Rather than thinking it's just a big block that I want to sort of sell to a pension fund, is it actually I just want to do an internal staff process and I don't actually ever want it to leave that ecosystem?
12:16Or I actually want a much more distributed cap table than I've got with a load of ultra high net worth?
12:21But the range of different use cases that's coming back to us is bigger, which tells me that it's filling a need that wasn't there before, wasn't met before.
12:29So I've just come back from Labour Party conference.
12:31I've been talking to the Chancellor.
12:33I wonder what you want from her in the budget.
12:37Yes.
12:38So the biggest challenge for the UK is that we have been, over the last 25 years, in equal opportunities under investor in ourselves as a nation.
12:48You know, it's simply put, our pension funds invest less in UK companies.
12:53Should they be mandated to invest in UK companies?
12:56I'll come back to that.
12:58Our pension funds invest less in UK companies than any of their peer funds around the world, however you measure it.
13:03And our level of retail participation is lower than it ever used to be and lower than a lot of our peer nations, even in Europe, let alone the US.
13:11Despite the fact that the FCA states that there are 7 million cryptocurrency accounts in this country.
13:16You know, so the simple reality is that we need to address that.
13:20But we have a system of tax credits that we've written as a nation, 48 billion on for pensions and 9 or 10 billion for ISIS, where we ask for none of that to be invested in the UK in return.
13:32We also charge stamp duty.
13:34So the same, I mean, we charge people to buy us.
13:37We don't have to.
13:38Stockholm doesn't.
13:39Should we get rid of that?
13:41Well, the challenge for the Chancellor, and I fully appreciate this, is that that is revenue that is 3 to 4 billion a year that is easy to collect.
13:48I totally understand it.
13:50So the question is, how do we get rid of the pernicious effects of it?
13:53We should not be taxing Brits to buy British companies and encouraging them to export our capital overseas.
13:59And buy Tesla.
14:00Yeah. So we tax people to buy Aston Martin who actually employ people in this country and build cars in this country.
14:04We don't tax them to buy Tesla or Porsche who don't.
14:06But there's a solution to this.
14:08There is, within the constraints of the public purse.
14:11And so it's going to be more complex to do.
14:13On pensions and ISIS, it's much less difficult.
14:16We write tax credits where we don't ask for anything in return.
14:20So you asked about mandation.
14:23For me, it's much more about saying if you want to be designated as a default pension scheme in the UK,
14:28then you should have a globally diversified portfolio, but not necessarily index-weighted,
14:34which is not diversified because that basically means 70% of your money is in the US with a declining dollar right now.
14:39And actually, say, 20%, 25% should be invested in UK assets of whatever description you have.
14:45Now, you can then opt out, as a pensioner, get your full tax credit in the non-default scheme.
14:50But if you want to be in the default scheme.
14:52And the interesting thing is we've run scenarios on this.
14:55We've actually done a survey on this, or New Financial did.
14:58The average pensioner that was surveyed thought that 41% of their pension funds' equities were invested in the UK.
15:06It's about four.
15:08Okay?
15:0972% wanted the government to support their pension money going to invest in the companies that were the future that their kids would be employed by, simply put.
15:19So, again, it's the story.
15:20It's actually perceived as a political risk, but perversely, we have made choices in the last 25 years to actually create incentives to subsidize the cost of capital of the S&P 500, not the cost of capital of the FTSE 350.
15:36And most countries in the world look at it as sideways.
15:38So, I genuinely think that the thing that I'd love to see is the confidence to make that choice, to say, yes, we want Britain to be investing in itself again.
15:52And I'll say one thing.
15:53I have heard the argument, but there's nothing to buy here.
15:56Now, you just mentioned Revolut.
15:58Okay?
15:58I see a remarkable number of entrepreneurs up and down this country doing remarkable, groundbreaking things every single day.
16:05You know?
16:06And I think, if you look at it, the major pension funds in Canada, in Australia, the major endowments in the U.S., the sovereign wealth funds, where do they set up their first office to buy assets overseas?
16:17London.
16:18Well, look, you've talked about remarkable fintechs, including your own, and overseas interest.
16:24We had the Euronext boss on Bloomberg TV saying that he might be interested in buying the LSE.
16:31It's easy to say it on Bloomberg TV.
16:32Have you actually had a knock on your door with an offer?
16:35It's not for sale.
16:38No, look, I'll be very clear with you.
16:41It matters to me that I run the only primary exchange in the London Stock Exchange group.
16:47That means I'm not in the slightest bit conflicted to be the biggest possible advocate for the health of the U.K. equity capital markets.
16:54And I operate in a group that has a market cap bigger than Euronext does.
16:57And I've seen what's happened to other exchanges in the group, because it's quite difficult to prioritise one when you own several.
17:04Okay.
17:05Final question.
17:0630 seconds.
17:07Are we going to see an IPO this month in London?
17:10We're going to see one tomorrow and one on Friday.
17:13So there you go.
17:13All right.
17:14Great note to end on.
17:15Dame Julia Hoggett, thank you so much.
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