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London should ditch aspirations to be a global centre for technology company listings and instead focus on reversing the flight of mining groups to Australia and Canada, says the head of a UK private equity manager specialising in metals and minerals.
Michael Scherb, chief executive of $4bn-in-assets Appian Capital Advisory, told the Financial Times that London needs to loosen requirements on companies on both the main market and the junior Aim market in order to revitalise the City as a hub for mining capital.
“If you look at what Toronto or even Australia have done better, it’s to open up more risk-on capital,” he said. “The London markets can do more to attract that type of capital by loosening some of the listing requirements.
“Mining company boards are being approached by bankers and other exchanges with a pitch that you get better valuations in New York or Toronto, so London needs to do more to counteract this.”
Scherb said it was “imperative” to implement proposals made by the UK’s Financial Conduct Authority in December to spur more listings on the main market and encourage British investors to put their money behind local equities.
The FCA’s plans include removing the need for companies to present three years of audited accounts and a more permissive approach to dual-class share structures.
He added that an overhaul was also needed for the Aim market — once a vibrant hub for early-stage exploration groups. Possible measures include easing obligations around financial reporting and advice.
Aim, for instance, requires companies to appoint and pay for so-called nominated advisers that ensure they comply with the rules, whereas neither rival exchange for junior companies in Canada or Australia has such a requirement.
While London’s efforts to attract high-growth technology companies have stalled, with chip designer Arm last year opting for a New York listing, the city remains a global capital markets powerhouse for mining. It hosts primary listings for industry giants Rio Tinto, Glencore and Anglo American, as well as Chilean copper producer Antofagasta and Endeavour Mining, which operates gold mines in west Africa.
But its position is increasingly under threat. The London Stock Exchange suffered a hit in 2022 when BHP moved its primary listing to Sydney as it unified its dual corporate structure. Since then, setbacks have included large Russian gold miners delisting following Russia’s full-scale invasion of Ukraine, Glencore planning to list a coal spin-off in New York and soda ash miner We Soda pulling its planned $7.5bn London IPO last year.
Appian, which recently hired sitting member of parliament Dominic Raab as an adviser on an annual salary of £118,000, itself had a difficult experience last year with a London-listed special purpose acquisition vehicle called ACG. The Spac had aimed to raise $300mn to buy two mines in its portfolio, but the $1.1bn deal ultimately collapsed.
Toronto and Sydney raised $44bn and $36bn, respectively, for mining groups in the previous five years up to the end of 2022, according to S&P Global Intelligence, versus less than $5bn in London over the same period.
Scherb said that London needs to embrace its traditional strength in banking and natural resources and aim to become the global home for investment in minerals critical for the green energy transition, “rather than trying to compete with New York on technology”.
Raab, who will work 44 hours a month as an adviser, agreed with Scherb on the need to deregulate London’s equity markets, although he told the FT that “it’s challenging because of all sorts of other equities and priorities”.
In his new role, Raab will chair an Appian partnership with Securing America’s Future Energy that aims to advise western and Middle Eastern governments on how to boost critical mineral supplies and evaluate potential projects.
