Yesterday I questioned why a financial giant a quarter of a century ago (Equitable Life) should be being split up between American finance houses so it can eat up more of our pension schemes and convert pensioner surpluses into secure rates of return for those abroad. Today “Utmost” will be owned by a couple of American holding companies as their private equity.
This morning the FT thunders for support for our Stock Exchange in general pointing out that in 2024 there was a 74% increase on 2023 in the amount of capital taken out of the Stock Exchange as companies de-listed.
It need not be so, ten years ago Pension Bee wasn’t started, now it is quoted on the stock exchange and very little thank it does. Ros Altmann and Sharon Bowles requested that the Pensions Bill include investment companies who are critical to the survival and then growth of the Stock Exchanges second tier.
Earlier this morning, I printed an article from Jason Stockwell , our new Lord speaking on Investment for the Government. I fall into the camp that follows him and believe that Britain’s problem is not economics . It’s belief.
Against that thinking is the belief that we simply cannot compete with the distribution available to American companies, and to the globalisation of capital markets, that makes our stock exchange insignificant.
Well let me throw Pension Bee at you, a firm that is taking on America in America, I have heard a lot of complaints about capitulation of British financial companies but not much praise for Pension Bee.
It turned in some pretty good growth figures for the UK and showed momentum in the States
Pension Bee’s CEO. Romi Savova
Yet neither it , nor many of the other stocks that I see mentioned by the London Stock Exchange are much promoted as British, either in our press or in political circles.
It is also easy to forget that despite the drumbeat of economic worries in the UK — from the Brexit referendum in 2016, to the “mini” Budget in 2022, which sparked ructions in financial markets — its strengths in finance alongside its start-up, innovation and talent ecosystem provide attractive buying opportunities. In April, BlackRock’s CEO Larry Fink said the fund manager was investing in UK assets “across the board” citing the country’s “fundamentally strong attributes”.
I live next door to Paternoster Square, pictured above. It is our equivalent of Wall Street but we do not have our Stock Exchange on tours of my part of the City. We focus on St Pauls, quaint pubs and tales of the 17th century, as if the City of London is a history item. As Lord Stockton points out in the article I publish
London remains the world’s leading international financial centre, handling over 40 percent of global foreign exchange trading. British banks are well capitalised. The legal system remains trusted. These things are easy to take for granted, until you look at countries where they are missing. Trust in institutions is not a nice-to-have; it shapes expectations and behaviour long before policy changes feed through.
The failure of our £3tr invested in pension funds here in the UK, to channel capital into UK listed companies has led to the value of the stocks purchased by overseas organisations and the de-listing of the companies from the LSE. It’s a bargain takeover market for private equity firms and their funds. The FT don’t like it
While the UK remains a leader at founding and incubating world-class companies, especially in fields such as artificial intelligence and biotech, the foreign interest reflects the fact that Britain lacks a deep enough domestic capital pool to scale them up into global players. The risk is that as international buyers scoop up companies before they reach maturity, decision-making centres move abroad.
Britain may share less of the future growth and wealth generation than if companies had remained UK-owned. By sapping future growth drivers, this dynamic also risks reinforcing weak equity market valuations, making further foreign takeovers more likely.
The challenge for UK policymakers is to harness the global interest while also rebuilding confidence and capital at home, so British firms are able to grow, consolidate and compete without feeling compelled to sell. A clearer growth strategy and more policy stability would be a start.
I don’t like it either and I hope that 2026 will see us stopping sending our pension capital on the slow boat to Bermuda, as funded reinsurance. The LSE organised a group of CEOs of companies quoted by them to write a public letter to the Chancellor of Exchequer, requesting money come to them. That letter has got some stick in pension circles as interference in fiduciary independence. I know one or two of the CEOs on the list and they are not being selfish and disruptive, they are merely looking to compete as British quoted companies.
We know we have more money in the magnificent 7 US tech stocks than in UK equities!
Our CEOs are looking for an answer to the problem they face, that of being bought out in Britain’s bargain takeover market – the London Stock Exchange.
