# What an IPO actually involves and why London keeps losing them

> An initial public offering is an 18-month sequence of prospectus drafting, FCA review, roadshows and bookbuilding, and the mechanics explain why founders increasingly choose New York's deeper capital pools over the London Stock Exchange.

*Section: Business — By Marcus Vale (Editor-in-Chief & Business & Markets Editor) — Published July 12, 2026 — 3 min read*

Canonical URL: https://dailyjunction.org/business/what-an-ipo-actually-involves-and-why-london-keeps-losing-them
Tags: ipo, london-stock-exchange, listings, capital-markets, city-of-london

## Key takeaways

- A London flotation typically takes 12 to 18 months, built around an FCA-approved prospectus, weeks of investor roadshows and a bookbuilding process in which banks assemble demand before setting the final price.
- Underwriting syndicates charge roughly 2 to 3.5 per cent of proceeds in London against 5 to 7 per cent in New York, yet companies still cross the Atlantic because US valuations and daily trading volumes routinely outweigh the fee saving.
- The structural drain on London is domestic: UK pension funds have cut their allocation to UK-listed equities from around half of assets in the 1990s to low single digits, removing the natural buyer that once anchored every float.

A company does not float on a stock exchange so much as crawl there. From the first beauty parade of investment banks to the opening trade, an initial public offering in London typically consumes 12 to 18 months, and each stage of the gauntlet is a small industry in itself. Understanding those stages explains something the City would rather not dwell on: why Arm, CRH, Flutter and a lengthening list of others have taken their listings, or their primary listings, to New York.

The process opens with the appointment of bookrunners, the banks that will manage the sale, alongside lawyers, accountants and, for a premium London listing, a sponsor firm that vouches to the regulator for the company's readiness. Then comes the prospectus, a document that routinely runs past 300 pages, setting out audited financials, risk factors and the business model in a form the Financial Conduct Authority must approve before a single share is offered. FCA review proceeds in rounds of comments and redrafts that can absorb months on their own. In parallel the accountants produce a working capital report confirming the company can survive at least 18 months post-float, and the lawyers run verification, a line-by-line exercise in which every factual claim in the prospectus must be evidenced, because directors carry personal liability for errors.

Only then does the sales machine start. Early-look and pilot-fishing meetings test sentiment among big institutions months out. An intention to float announcement starts a public clock. The management team then spends roughly two weeks on the roadshow, pitching to fund managers in London, Edinburgh, New York and Frankfurt while the banks build the book: an order-by-order tally of who will buy how many shares at what price. Bookbuilding is where the pricing game is played. Banks want the issue covered several times over so they can allocate to favoured long-term holders and engineer a first-day rise of 5 to 15 per cent, the pop that flatters everyone except the selling company, which has left that money on the table. Price the range too ambitiously and the float is pulled, an embarrassment London has seen repeatedly in thin markets.

## Why the traffic runs one way

Every stage of that gauntlet exists in New York too, and by most measures the US version is harsher: SEC review is slower, litigation risk is greater, and underwriting fees run to 5 to 7 per cent of proceeds against London's customary 2 to 3.5 per cent. Founders go anyway, because the two numbers that matter most sit on the other side of the ledger. The first is valuation. Comparable companies, particularly in technology, have traded at persistently higher multiples on Nasdaq and the NYSE, a gap boards struggled to justify ignoring when Arm's owners chose New York in 2023 for a flotation that valued the chip designer at over $50 billion. The second is liquidity. Daily trading volumes in large US-listed shares dwarf London's, which narrows spreads, steadies the price and makes it easier for early investors to sell later without moving the market.

The deeper cause is domestic and slow-moving. British pension funds and insurers held around half their assets in UK equities in the 1990s; after two decades of de-risking into bonds, the figure has fallen to low single digits. The natural home buyer that once anchored every London float has largely left the market, so a UK company floating in its home city is selling mainly to the same global institutions it would meet in New York, minus the index inclusion and passive flows that follow an S&P 500 entry.

London has responded. The FCA's 2024 listing reforms collapsed the premium and standard segments into one, relaxed rules on dual-class shares beloved of founders, and eased shareholder-vote requirements for big transactions. Stamp duty of 0.5 per cent on UK share purchases, a friction US buyers never pay, remains in place, and successive chancellors have circled schemes to push pension money back towards UK equities. Reform of the plumbing is real, but plumbing was never quite the problem. Until the buyers return, the gauntlet will keep ending, for the largest companies, with a bell rung on the wrong side of the Atlantic.

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Daily Junction — https://dailyjunction.org/business/what-an-ipo-actually-involves-and-why-london-keeps-losing-them