Proactive Investors - Deliveroo PLC (LON:ROO), THG PLC (LON:THG) are expected to be among the new companies joining the FTSE 350 at the next reshuffle, which along with a predicted rejuvenation of the IPO market in coming quarters should breathe new life into the London market.
The food delivery platform and the owner of the Hut Group are among four companies switching their listing category following changes to the UK’s stock market listing rules.
Both Deliveroo, at over £2 billion, and THG, at around £700 million, are big enough for the FTSE 250.
Two more, near-£29 billion Coca-Cola (NYSE:KO) Europacific Partners, and Oxford Nanopore Technologies PLC (LON:ONT) at £1.3 billion, which previously didn’t qualify for the FTSE indices, have also laid the groundwork to change their listing category.
Coca-Cola Europacific, the world’s largest independent Coca-Cola bottler by revenue, is big enough to not only join the FTSE 100 but would be in the top third of the biggest companies.
“Recent changes to the UK’s stock market listing rules should lead to a host of new names joining the FTSE 100 and FTSE 250 indices in the new year. This should generate more interest in the UK stock market and put more companies on the radar of investors,” says Dan Coatsworth, investment analyst at AJ Bell (LON:AJBA).
He says Coca-Cola Europacific, Deliveroo, Oxford Nanopore and THG joining the FTSE 350 "could be the trigger for more ‘ineligible’ companies to follow suit and find a way into the FTSE".
Companies joining major indices get extra benefits as well as the kudos and profile boost, with tracker funds for the FTSE 100 or FTSE 250 also buying the shares, while liquidity could also improve.
Changes to the London listing rules mean companies now need to be part of the new ESCC (equity shares commercial companies) category, which was created in July via a merger of the former premium and standard listing categories.
Deliveroo has already completed the move to the ESCC category, with Oxford Nanopore looking to transfer on 6 November, Coca-Cola Europacific Partners on 15 November and THG by March 2025.
That will be too late for Deliveroo in the next quarterly FTSE reshuffle, where the cut-off date is 31 October 2024.
With interest rates coming down and once next week's Autumn Budget has cleared some of the current uncertainty, a host of London IPOs are also expected.
This looks like including French TV and film group Canal+ with an IPO planned for December if shareholders approve the break-up of parnet Vivendi (EPA:VIV).
This is timed to happen just after the release of the latest Paddington film, produced by Canal+’s StudioCanal arm.
Giant accountant EY said recently it anticipates some pick-up in IPO activity in the turn of the year, with EY reporting an "improved deal pipeline" after just 10 companies listed in the first nine months of 2024, drumming up a total of £584.6 million, down 47% compared to the same period in 2023.