The world's most international exchange
In the face of the Covid-19 pandemic, this is proving to be a good year for London Stock Exchange - the world's most international stock exchange with the greatest number of international listings, members and investors. International shareholders represent over half the ownership in UK stocks.
Its equity markets have been raising billions for companies in the first half of 2020, ranging from £5m to £2bn, highlighting the sheer range and scale of capital that can be accessed - and in double-quick time.
Its debt capital markets have issued well over 500 bonds in the first half of the year - and not just from large corporates and sovereign nations. The African Development Bank’s (AfDB) $3bn Fight Covid-19 social bond was just one of several "social bonds" to be issued.
Its roots go back to 1698 when John Castaing published a list of currency, stock and commodity prices at Jonathan’s Coffee House. A more formal club known as ‘New Jonathan’s’ or ‘The Stock Exchange’ opened in 1773. It took up residence in its current home in Paternoster Square in 2004.
Some of its markets reflect this deep heritage. There are 23 London-listed investment funds with track records lasting more than 100 years. They have been through everything - two world wars, the Great Depression in the 1930s, oil crises and financial crises and global pandemics - and have consistently paid out dividends.
Another good - if more recent - example is its Alternative Investment Market (AIM), which has become the most successful growth market in the world. The market celebrated its 25th anniversary this year. That longevity alone is worth celebrating. When it launched in 1995 the private equity and venture capital industries were in their formative years. There weren’t many angel investors. Crowdfunding or peer-to-peer lending platforms did not exist. In other words, there were few options outside of bank finance.
Over that period, AIM has supported over 3,800 companies from 79 countries. In total, these companies have raised £118bn; £45.4bn (39%) at admission and £72.4m (61%) in follow-on rounds. For the past 13 years, the amounts of follow-on capital raised on AIM have been significantly larger than those raised on admission. In 2019, AIM companies raised £489m on admission but £3.3bn in follow-on rounds.
Last year, AIM accounted for 60% of all IPO and follow-on capital raised on European growth markets – 2.9 times more than the next European growth market. There were 362 deals on AIM in 2019, raising £574m through IPOs and £3.8bn in follow-on rounds.
Its strengths have come to the fore during the COVID-19 pandemic and its dominant position in Europe is set to continue. In the first six months of 2020, approximately 200 AIM-listed companies raised over £2.8bn in follow-on capital on AIM – which included most of the biggest European growth market deals.
The market is maturing. There has been in increase in the size of companies using AIM. Today, more than half (53%) of AIM-quoted companies have a market capitalisation above £25m, compared with one-third in 2000.
Across its range of asset classes, London Stock Exchange is innovative and world-reaching. The Shanghai-London Stock Connect now enables Chinese firms to raise capital in London (only two to date, but more are anticipated). And did you know that London is the number one destination outside of Moscow for trading many Russian securities?