The UK market is trying to wake up, but the money supporting new listings is still thin, based on data from Bloomberg.

The tension showed when Alexandra Jackson, who runs the Rathbones UK Opportunities Fund, studied Shawbrook Group Plc’s listing in London.

Jackson looked at everything the bank pitched but walked away because she worried the government could raise bank taxes in the next Budget. Her hesitation matches what many London investors are feeling right now.

After years of takeovers and companies quitting the market, people want fresh deals, but they do not have the cash or confidence to go all in.

The money firepower behind UK’s domestic stocks has weakened after four straight years where UK equity funds bled cash almost every month and pension funds now hold only a small slice of UK stocks compared with what they once had.

On top of that, investors are dealing with tax uncertainty, unclear regulation, and a slow economy, so yeah when talk of higher bank taxes resurfaced ahead of the Budget, frustration deepened. Jackson said, “We thought it was prudent to wait. I want to see how the bank tax situation plays out.”

UK managers cut check sizes as IPO demand shrinks

Even when fund managers show up for listings, the size of the checks they write is nowhere near what it used to be. Charles Hall, head of research at Peel Hunt, said past orders could reach £20 million, but now the typical range is £3 million to £5 million.

Hall said, “This means that to raise capital you need a lot more investors to participate in the IPO, but the universe of investors is decreasing.” Smaller companies feel the pressure the most because their deals depend on local buyers.

Ahead of the Budget, more than 250 executives joined London Stock Exchange Group Plc in writing to Chancellor Rachel Reeves.

Leaders from Revolut Ltd. and Anglo American Plc signed the letter, which pushed for pension reforms that would push more money toward UK assets. Domestic stocks now make up only 4.4% of pension fund portfolios, down from more than half at the start of the 2000s.

The average UK adult puts only 8% of their wealth into stocks or mutual funds, the lowest figure in the G7. Many investors use cheaper global passive funds instead of backing domestic stock pickers.

Over the past five years, the number of UK-focused funds has dropped 17%, based on fund documents reviewed for the report.

IPOs became a symbol of London’s long slump. The freeze was so deep that the exchange fell in global rankings this year. A recent trio of listings gave some relief, but it did not reverse the bigger trend.

Shawbrook and The Beauty Tech Group Plc priced their shares in the middle of their ranges, while Princes Group Plc priced at the bottom.

Out of the three, only Shawbrook trades above its offering price. Tom Moore, a senior investment director at Aberdeen Group, said, “At least there are IPOs again. The problem is, investors aren’t making money on them.”

Shawbrook still attracted heavy attention. The deal pulled in demand for seven times more stock than was available and brought in more than 170 financial institutions, plus retail buyers.

James Wootton, global co-head of equity capital markets at Linklaters, said the deal “demonstrated a road to liquidity and growth capital that for a while some people doubted was still available.”

UK officials weigh ISA changes as new listings line up

Buyers in the UK took about 88% of Beauty Tech’s £106 million offering. Princes had mixed participation: it got around 50 bids, but just 10 bidders took about 90% of the shares. More than half the cash came from the company’s executive chairman and its parent group.

To pull in more retail investors, the government is weighing changes to ISAs, like removing stamp duty for London-listed shares purchased inside ISAs and possibly adding a short-term stamp duty holiday for newly listed stocks. No final decisions have been made, as the Treasury only said it wants to “get the balance right on ISAs.”

Dealmakers hope the recent listings are the start of a new cycle. Visma, Loveholidays, and Markerstudy are considering London for future listings. Navoi Mining & Metallurgical Co. and the Uzbek wealth fund UzNIF may pursue dual listings in London and Tashkent.

Jackson said she bought into the Raspberry Pi Holdings listing last year and has met companies planning to go public soon. She said, “Investors are keen for something new. We’re selective, but definitely not closed to IPOs.”

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