London has fallen out of the world’s top 20 destinations for initial public offerings (IPOs), marking one of its weakest years in decades and underscoring the ongoing challenges facing public equity markets in the United Kingdom (UK).

According to Bloomberg data, companies listing in London have raised just $248 million so far this year, placing the UK behind countries such as Mexico and Oman. By contrast, IPOs in the United States have generated nearly $53 billion in the same period.

The decline in the UK represents a 69% drop in fundraising compared with last year and continues a pattern of subdued activity that began during the Covid-19 pandemic.

Analysts say the problem reflects both global and domestic forces. Around the world, companies are staying private for longer as large venture and private equity investors provide capital that once came from public markets. The UK’s slump, however, appears particularly severe, driven in part by a long-term withdrawal of domestic pension capital from British equities.

British government data show that UK defined-benefit pension schemes, once a mainstay of support for listed companies, have cut their exposure to local equities from about 32% in 2006 to less than 2% by 2023.

Over the same period, their allocations to government bonds rose from 15% to 37%. The shift has been driven by tighter regulation and the need to match long-term pension liabilities with safer assets.

Underpowered

Analysts say that a decline in domestic institutional ownership has left the UK equity market weaker, with more takeovers and delistings than new listings, compounding the problem.

Pension funds are also increasingly investing in global index trackers with heavy exposure to US equities. As a result, much of Britain’s household savings now flow to American companies rather than firms listed in the UK.

Policymakers are exploring ways to reverse the outflows. The British government is reportedly considering waiving the 0.5% stamp duty on new listings, one of the highest share-transaction taxes in the world, as part of next year’s budget. The think tank New Financial has proposed requiring pension funds to invest 20–25% of their equity holdings in UK stocks to rebuild domestic demand.

Despite the weak year, analysts expect some recovery in 2026 as global interest rates stabilise and valuations improve. “The IPO market is expected to gradually improve and pick up in 2026,” said Charles Hall, head of research at a British investment bank, Peel Hunt.

However, London’s fall from the global IPO rankings raises a deeper question about whether Britain can restore investor confidence in its own markets.