IPO boom helps boost fortunes of London Stock Exchange Group

Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown

“This year’s IPO boom has helped boost the fortunes of the London Stock Exchange group with new issues of shares pushing up equity revenues by 2.5%. London may still pale in comparison to New York in the scale of new listings, but it’s making sure but steady progress in attracting bigger names. Last year’s frenzy of share trading as new investors swept into stocks as the financial markets plunged, has subsided, so secondary revenues for the group have fallen back as volumes normalised.

The exchange, seeped in 300 years of history, is positioning itself for a digital first future as an integrated data, trading and analytics platform. It’s a crucial move as the digitalisation trend sweeping through the financial markets is again in evidence, with strong growth at group’s electronic trading platform Tradeweb. That helped push fixed income, derivatives and other revenues up by 15.4%. There will be some relief among investors that £77 million of efficiencies have been identified through the integration of Refinitiv data service, as the acquisition had ruffled shareholder feathers due to concerns about higher than expected costs of blending it into operations. Offloading Borsa Italiana was part of its metamorphosis into a leaner more efficient operation, and a rise of 4.6% in revenue for the first half and a 7% increase in the dividend year on year is a welcome sign. But clearly more work needs to be done, as the expense of legacy IT is expected to be one of the rising costs eating into the bottom line in the second half of the year.”

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