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London Listings to Get a Boost From FCA Reforms, LSEG Boss Says

(Bloomberg) -- London Stock Exchange Group Plc’s boss said the UK’s recent capital markets reforms are making the financial hub “more competitive” and “more attractive” for listings.

Regulators last month overhauled their listing rules, making it easier for companies looking to make their public debut in London, as part of a concerted effort to draw more initial public offerings to the City. 

“All of these initiatives are helpful and all of them add up incrementally to making the environment that much more attractive,” LSEG Chief Executive Officer David Schwimmer told Bloomberg Television’s Tom Mackenzie and Anna Edwards in an interview on Thursday after his company announced its earnings for the first half of the year.

The Financial Conduct Authority said in July that businesses will be allowed to carry out more activities without putting them to a shareholder vote and can also have two classes of shares — a structure often favored by entrepreneurs or early stage investors who want to have a significant role in businesses even after they have gone public.

“The FCA has been working on these for a couple of years and these are the biggest changes to the listings regime in 30 years or so,” Schwimmer said. “There’s more opportunity to continue to do more and there’s more coming.” 

The pipeline for initial public offerings is looking “encouraging,” he added. 

The massive global IT outage triggered by a cybersecurity bug that crashed Microsoft Windows computer systems last month doesn’t change LSEG’s partnership with the tech titan and the “opportunity we have to build product together,” Schwimmer said. 

However, “it is important for the industry to think about single points of failure and risk management,” he added.

The market infrastructure and data provider said in a statement Thursday that adjusted Ebitda for the first half of the year climbed about 8% to £2.04 billion ($2.6 billion), slightly above the consensus £2.02 billion in a Bloomberg survey. Total income, excluding recoveries, gained 5.4% to £4.2 billion in the period. Pretax profit rose 4.7% to £693 million, missing the £864 million estimate. 

Shares of LSEG climbed as much as 3.3% on Thursday, the biggest intraday gain since December 2022. 

Other key highlights from first-half earnings:

  • Adjusted Ebitda margin at 48.5%, up 120 basis points
  • Adjusted net finance costs of £112 million mainly reflect cost of refinancing in the current higher interest-rate environment and higher net debt
  • Adjusted EPS up 8.1% to 174 pence
  • £1 billion returned via buybacks in the period, directed at holdings of Blackstone consortium
  • Interim dividend of 41 pence

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