According to data from EY, the accountancy firm, there have been only ten new listings in 2023, totaling £584.6 million in raised capital, which is a 47% drop year-on-year.

Scott McCubbin, who heads EY’s IPO division for the UK and Ireland, noted that the third quarter is generally a sluggish period for new listings. He attributed the hesitation among businesses to proceed with stock market floatations to the upcoming October budget, concerns regarding interest rate adjustments, and inflation trends.

“As we move into the final quarter of 2024, we expect some recovery in IPO activity, although these may be pushed back to early 2025,” he stated. “Ongoing geopolitical challenges in Ukraine and new tensions in the Middle East add to the uncertainty, but the prospect of a stronger deal pipeline is encouraging.”

Globally, IPOs in the third quarter surpassed activity from earlier in the year, with 310 new listings that raised a combined $24.9 billion.

This reflected a 14% decline in total volumes compared to the same time last year, with proceeds falling by 35% according to EY’s analysis.

In contrast, regions such as the Americas and broader Europe, the Middle East, India, and Africa have maintained stable listing activity, experiencing digital growth in both the volume of deals and the capital raised compared to the previous year.

Meanwhile, the Asia-Pacific area saw a resurgence in the third quarter, with heightened IPO activity in countries like mainland China, Indonesia, Malaysia, and South Korea.

This year, the Financial Conduct Authority introduced the most significant regulatory changes for companies listed in London in three decades, aimed at revitalizing the UK’s capital markets.

London has faced challenges in attracting high-growth start-ups in the face of competition from New York. Notably, major UK firms like bookmaker Flutter and construction materials group CRH have relocated their primary listings to the US.

The new regulations empower company executives to make decisions without requiring shareholder votes, offering increased flexibility for firms to implement dual-class share structures often favored by founders and venture capitalists, providing them with enhanced voting rights over other shareholders.

According to EY, the artificial intelligence sector has emerged as a significant source of IPO activity, with over 60 AI companies going public annually in the past two years, approximately half of which have reported profitability. An additional 50 AI firms are currently preparing to file for IPOs.

Looking ahead, EY anticipates that a reduction in interest rates and declining inflation may stimulate new listings, particularly in sectors that are more impacted by borrowing costs.

The global oil company, listed on the FTSE 100, had initially targeted a 40 percent reduction in oil and gas output by 2030 while increasing investments in renewable energy under the leadership of former CEO Bernard Looney in 2020. Looney resigned last year after revelations concerning undisclosed personal relationships with staff members.

Following a dramatic surge in commodity prices, the target was revised in February of the previous year to a 25 percent reduction from 2019 levels, which would result in BP maintaining production at approximately two million barrels daily.

Murray Auchincloss, who took over as permanent CEO earlier this year, is reportedly set to formally abandon this production target in February. This announcement is anticipated during the company’s update on its capital allocation strategy, as per Reuters.

This news coincides with Brent crude prices, the global benchmark, climbing above $80 per barrel for the first time since August, influenced by the escalating conflict in the Middle East, marking a 3.1 percent increase to $80.50 per barrel.

A spokesperson for BP stated: “As Murray outlined at the beginning of the year in our fourth-quarter results, our direction remains consistent, but we are shifting towards becoming a simpler, more focused, and higher-value company.”

When questioned in July regarding potential changes to the production cut plans, Auchincloss remarked: “I’m not particularly focused on production volumes; my emphasis is on cash flow and earnings, which I believe are paramount to the market.”

This year, BP has faced scrutiny from activist investor Bluebell Capital. This firm, known for its campaigns with Glencore and BlackRock, urged BP to enhance its oil and gas output and cease further investments in what they termed “ill-conceived” wind projects.

Commenting on the situation, Giuseppe Bivona, co-chief investment officer at Bluebell, stated: “This aligns perfectly with our requests: as an oil and gas enterprise, BP should prioritize oil and gas production instead of diminishing its business scope in favor of renewable alternatives.”

The hedge fund criticized a strategy they described as “irrational,” suggesting that BP’s accelerated transition away from fossil fuels compared to rivals is detrimentally impacting shareholder value.

Environmental advocates have condemned the reports of BP’s shift. Philip Evans, a campaigner with Greenpeace, declared this decision as “further evidence that we cannot trust the future of our planet to fossil fuel executives.”

Auchincloss, 54, is working to restore confidence among investors as BP’s stock performance has lagged behind peers like Shell and other international oil and gas companies.

The Canadian CEO has outlined plans to achieve at least $2 billion in cost savings by 2026, having implemented a freeze on external hiring, with exceptions for critical positions such as well-site leaders and safety personnel.

Bidding for new offshore wind projects has also been paused as BP aims to streamline operations and reduce expenditures. The company is currently focusing its resources on ongoing projects in the UK and Germany, having sold its ten US onshore wind farms last month, exiting that market entirely.

Since the beginning of the year, BP shares have decreased by 10 percent, contrasting with a 1.5 percent gain in Shell’s stock value. BP shares ended the day up by 1.3 percent, or 5p, closing at 422p.

Now, from my perspective as a chairman and investor, I examine the issue of failure differently. When public companies struggle—whether it’s declining profits, stagnant growth, or anxious shareholders—the immediate response often falls on the CEO. However, boards must also confront their own role in these failures, as they are responsible for the appointments they make.

It is remarkable how frequently boards miss the mark when it comes to hiring leaders. Much of the time, this is due to recruitment processes that lack broader perspectives, misjudged criteria, and inadequate assessments of leadership qualities.

I often find myself questioning how retail companies falter when they select a CEO with minimal industry knowledge, or how financial giants lose their edge bringing in bankers who lack true operational experience. My reaction is always, “What did you expect?”

If we hire leaders without the necessary experience and merely hope for success, the accountability should not rest solely on the CEO. This principle holds true at every organizational level; if a team member underperforms, it might stem from having been promoted beyond their capabilities. Thoughtful consideration is essential before assigning blame.

As a chairman, I start by asking the rationale behind a new appointment. What is the ambition driving this choice? What changes must we implement to achieve our goals? Which skills are essential for success, and what mission can unify the company?

Following this inquiry, I refer to the Procter & Gamble hiring philosophy: Has done. Can do. Will do. It is crucial not to risk everything on a CEO who has not yet demonstrated their capabilities. Given the vast responsibilities of a CEO today, if someone’s experience is highly specialized and limited to a single organization, particularly one where they did not interact closely with clients or teams, they may not be the best fit. While they may not need direct industry experience, relevant experience remains critical.

A successful CEO must have a history of sustainable achievements beyond mere short-term gains. They should also possess the interpersonal skills to motivate and galvanize the organization. They ought to have a proven track record, the ability to perform, and the vision to exceed expectations.

I take full accountability for the CEOs I have brought on board in the businesses I lead or invest in. When aligned with the right plan, my chosen leaders—such as Ross Clemmow at HomeServe and Jambu Palaniappan at Checkatrade—can steer the organization toward success.

At times, boards may overcomplicate matters by hiring external candidates who lack a grasp of the existing culture, leading to morale issues. Yet, when the appointment is right, a CEO must stand firm against headwinds.

Consider Philip Jansen’s departure from BT, where the share price fell by 50% during his tenure. Nevertheless, his strategic decisions paved the way for a stronger future. I believe Allison Kirkby, his successor, will thrive partly due to the groundwork laid by Jansen, illustrating how boards can successfully align their long-term vision even when short-term pressures exist.

Be wary of candidates who might get distracted by non-core initiatives or those who shy away from challenging the board. While consensus is valuable, it should not come at the expense of transformative leadership decisions. Boards require leaders who can forecast long-term challenges and are not solely focused on preserving the status quo.

Additionally, it is vital to ensure that the board is deeply involved in the hiring process, avoiding scenarios where a CEO imposes their preferences on the board. Internal candidates often represent the best option, as they already understand the company culture and its market dynamics.

When evaluating external candidates, I emphasize their records of driving revenue and profit growth along with their plans for team development. High-caliber leadership talent and a focus on internal growth are essential, complemented by qualities such as humility, curiosity, and a commitment to the company’s vision over personal ambition.

To facilitate effective hiring, professional recruiters who are experienced in your sector are invaluable. Providing them a clear, detailed job specification that reflects board consensus helps articulate the challenges and expectations ahead, establishing a precise candidate profile that aligns with the company’s cultural values.

As I seek a new CEO for Business Leader, my criteria focus on proven leadership within B2B settings. A clear, narrowed selection process enhances our chances of success.

In my earlier days with HomeServe, I relied heavily on personal connections for recruitment but soon recognized the necessity for a wider talent pool. Investing in professional headhunters has proven worthwhile. A major lesson I’ve learned as a chairman is to avoid candidates who attribute poor performance to external factors like the pandemic or economic crises. True leaders rise to challenges and deliver results, regardless of outside circumstances.

When you hear about a CEO’s failure due to lack of relevant skills or industry fit, consider who made the appointment; often, that is where accountability lies.

Richard Harpin is the founder and chairman of HomeServe and Growth Partner.

A recent report from insolvency practitioners Begbies Traynor revealed that 632,756 companies faced a considerable risk of failure between July and September, marking an increase of almost 30% compared to the same timeframe last year, and a 5% rise from the previous quarter.

Begbies Traynor’s assessments are based on various metrics, including retained profit levels, interest coverage ratios, and outstanding liabilities.

This figure represents the highest level of financial distress recorded by Begbies Traynor since the inception of its Red Flag Alert report 20 years ago, surpassing the levels seen during the 2008 global financial crisis.

The rise in corporate distress was largely driven by a nearly 20% escalation in utility companies nearing closure. Moody’s, a credit rating agency, has expressed concerns about the water utility sector’s outlook, cautioning that companies like Thames Water might struggle under debt constraints if they face limitations in raising customer bills.

Additionally, there was a 10.4% increase in food and drug retailers experiencing significant financial distress, a 9.9% rise in the financial services sector, and an 8.7% increase among bars and restaurants. Overall, 21 of the 22 sectors monitored by Begbies Traynor reported rising levels of distress in the last quarter.

Despite these troubling trends, the number of firms facing critical stress—defined as the highest level of distress—fell by 23% to 31,201 in the last quarter from 40,613, attributed to improved financial conditions in the hotels and accommodations, construction, and real estate markets.

Julie Palmer, a partner at Begbies Traynor, warned that upcoming tax increases proposed by Rachel Reeves during the October 30 budget could drive already vulnerable firms to the brink of collapse.

“The expectation of a government transition was seen as a potential driver for much-needed economic support, but there are growing concerns regarding the implications of the forthcoming budget, which could have a detrimental impact on numerous businesses that are already struggling, particularly as many might face increased employee-related tax obligations,” she explained.

Reeves is considering approximately £40 billion in fiscal adjustments, including hikes to capital gains taxes and adjusting employer pension contributions to national insurance.

In separate data released by the Insolvency Service, the number of company insolvencies rose by 2% last month to 1,973 from 1,943, although this is down by 7% year-on-year.

Jo Streeten, managing director at consultancy AECOM, commented, “Business sentiment has declined since the summer, intensifying the focus on the chancellor’s budget.”

“While it seems businesses may have to bear an increased tax burden, there are also anticipations that the budget will introduce new policies aimed at stimulating investment and providing greater clarity regarding significant infrastructure projects.”

On the personal insolvency front, numbers surged by 44% over the past year to 10,651 in September, influenced by the abolition of the £90 fee for obtaining a debt relief order, a formal process aiding individuals in managing their debt commitments, along with other recent policy changes.

However, those who retained their shares have witnessed a staggering 97 percent decrease in value, culminating in a recent 25 percent drop that brought shares down to £1.20. Once considered Britain’s equivalent to Ferrari, Aston Martin has faced a myriad of challenges, including missed production targets and ongoing financial restructuring. The latest developments do little to instill confidence in a swift turnaround.

The company has encountered a series of unfortunate events lately, including a flood at one supplier, a fire at another, and multiple bankruptcies, all contributing to a significant backlog of nearly completed vehicles at its Gaydon factory in Warwickshire. Many cars are ready for sale but lack essential components such as door handles and steering wheel trims.

Affluent clients, who are willing to spend up to £350,000 on these luxury vehicles, expect impeccable attention to detail. Although the company could expedite delivery through costly means—potentially up to $10,000 per vehicle—the declining demand from China, a vital market, adds another layer of complication.

New CEO Adrian Hallmark, who took the reins on September 1, has decided to accept reduced delivery volumes instead of pushing for unrealistic targets, a choice he described with the phrase “smooth the cadence of wholesale volumes.” This decision has certainly impacted the company’s stock performance.

Hallmark, formerly of Bentley, cannot be held accountable for the existing challenges as he is still in the early stages of his tenure. Nevertheless, he must address the significant supply-chain risks as Aston Martin continues to grapple with financial losses and a precarious debt situation.

While mingling with stars like Daniel Craig and George Clooney at the recent unveiling of the new V12 Vanquish in Venice is glamorous, it is crucial for Hallmark to ensure that production lines are adequately equipped with necessary components.

Stock Market Reflection

This analysis has previously highlighted the poor performance of newly-listed companies from the 2020-21 period—when lockdowns and government support encouraged investors to back several underperforming entities. Examples include The Hut Group, Dr Martens, and Deliveroo, among others.

Aston Martin’s struggles further tarnish the reputation of the 2018 IPO class, which includes Finablr, a foreign exchange group that collapsed under questionable circumstances, and Funding Circle, which has seen a 69 percent dip in its stock value since going public, although it is currently showing signs of recovery. Another 2018 newcomer, law firm RBG, issued a profit warning recently and has plummeted 96 percent since its IPO.

The London Stock Exchange’s track record of listing such underperforming companies raises questions. Brokers lament the lack of interest in new listings but fail to recognize that part of the problem lies in their failure to maintain rigorous standards in evaluating potential IPOs.

This issue underlines why some pension funds are apprehensive about government plans to encourage more investment in UK firms. A focus on business-friendly reforms is essential before demand for new listings can rebound.

An upcoming test will be the market response to the Liverpool-based dietary supplement supplier, Applied Nutrition, which has initiated its IPO process with an estimated valuation of £500 million.

The recent success of Raspberry Pi, which has risen 37 percent since its initial public offering, sets a hopeful precedent. A successful Initial Public Offering (IPO) for Applied Nutrition, chaired by Andy Bell—a proponent of shareholder value—could help restore investor confidence.

Balancing Fiscal Policy

In light of speculation surrounding potential adjustments to fiscal policies, particularly by Rachel Reeves, there is discussion about utilizing assets like the student loan portfolio to help justify increased borrowing. However, doing so could also illuminate pressing off-balance sheet liabilities, like the estimated £1.5 trillion in unfunded pension commitments to public sector workers, which far outweigh any potential savings.

A prudent approach is necessary, as Warren Buffett’s metaphor reminds us that calling a tail a leg doesn’t change the fundamental reality—something certainly understood by the gilt market.

Change in Leadership at PRS REIT

The FTSE 250 index bids farewell to Virgin Money as it integrates into Nationwide Building Society, while welcoming PRS Reit, a £500 million investment vehicle focused on rental properties.

Outgoing chairman Steve Smith’s statements claiming this transition as a “landmark achievement” appear overly optimistic, especially considering it follows a successful investor revolt that forced leadership changes to address longstanding issues within the company.

Paul Sanderson, the Chief Executive of The Recycling Association, provided his insights.

According to Sanderson, placing unwanted items on the street for others to utilize has both environmental and social advantages. If done considerately, it should not result in fines.

The principle of ‘reduce, reuse, recycle’ is widely recognized. Offering functional household items to neighbors for free aligns with ‘reuse,’ which is even superior to recycling in many instances.

This method is the most eco-friendly option, and both local councils and residents should approach this with common sense.

However, if individuals are consistently abandoning a large volume of waste, obstructing pathways, or creating a mess, then regulations should be enforced.

Sharing small items like old records, furniture pieces, or excess homegrown vegetables outside your residence shouldn’t be labeled as fly-tipping, provided they don’t disrupt pedestrian traffic.

Although some councils have reuse facilities, they often prefer items that are in good condition or easily upcyclable. Used sports gear, for example, may have a better chance of finding a new home on a neighboring street than in a reuse facility.

This results in usable items being sent to recycling centers instead, which is better than direct disposal but less efficient than reuse. Recycling also incurs costs to local authorities, ultimately affecting taxpayers and consuming more energy than simply reusing an item.

That said, anyone opting to leave items outside should follow basic guidelines—if items are not taken within a reasonable timeframe, they should be brought back indoors or donated to online thrift stores or charities.

For larger items, such as furniture or old electrical appliances, residents should ensure that these are recycled properly via their local council. Retailers often provide recycling services when purchasing new appliances.

If no recycling service is available, local councils typically offer bulky waste collection or have reuse facilities. However, when it comes to smaller items, supporting ‘middle-class’ reuse is a favorable option, according to Sanderson.

Yes

On the contrary, Paul Dimoldenberg, a Labour member of Westminster City Council, argues against the phenomenon.

His years in local government have led him to scrutinize the motivations of those who place significant amounts of unwanted items outside their properties for passers-by to take.

Piles of discarded furniture and literature are frequently adorned with hastily written ‘please take!’ signs.

Dimoldenberg recalls the scene of a couple mid-move grappling with a shabby IKEA shoe rack, fraying tempers leading them to wish someone would just take it away.

While he sympathizes with the desire to help, too often these offerings result in broken furniture, warped cabinetry, and a box of outdated novels—items that are neither appealing nor usable.

Though he acknowledges that some may view fines as excessive, he asserts that fly-tipping poses significant challenges in Westminster, with 500 fines already issued for waste dumping this year.

This trend can transform the city’s streets into hazardous zones, particularly for those with visual impairments, and burden waste management teams.

While the initiative to encourage reuse and recycling is commendable—Westminster City Council actively promotes campaigns for such practices—residents need to recognize the impracticality of expecting community members to be on the lookout for literary treasures.

Items left outdoors are often degraded by exposure to the elements, making them less desirable for collection.

Westminster City Council prioritizes warnings about inappropriate waste placement before resorting to fines, but emphasizes that such measures are essential for maintaining clean and safe public spaces.

The sale involved 290,000 shares, resulting in Wolfson retaining approximately 950,000 shares, which is currently valued at around £100 million according to regulatory disclosures.

This share sale has caused Next’s stock price to decline by 358p, or 3.5%, bringing it down to £97.42.

This divestment follows a significant 36% increase in the company’s share price over the previous year. Despite the ongoing cost of living crisis and rising inflation, Next has proven resilient, often viewed as a barometer for high street retailers. The company has consistently under-promised and over-delivered on its financial forecasts, recently revising its profit predictions upwards for the second time this fiscal year due to stronger-than-expected sales.

At 56 years old, Wolfson has been at the helm of Next since 2001 and is widely recognized for transforming the retailer into a leading player in the industry. Under his guidance, Next has expanded into a multinational corporation based near Leicester, operating 458 stores across the UK. Its Total Platform, which serves as an ecommerce hub, aids third-party retailers in selling products online.

The share sell-off is described as a form of “top slicing” by Wolfson, who last sold shares in January and previously in November 2020. This decision arrives in advance of a significant budget announcement from the new Labour government next month. Rachel Reeves, the chancellor, has not excluded the possibility of increases in inheritance and capital gains taxes, following warnings from Sir Keir Starmer that the budget could be challenging. Wolfson is a Conservative peer in the House of Lords and has been a known supporter of Brexit.

Analysts noted that company executives face restrictions on trading shares for much of the year, permitted to do so only when public information about the company is disclosed.

Last week, Next reported its financial results, highlighting a 7.1% increase in pre-tax profits to £452 million for the six months ending July 27. The company projects an annual profit nearing £1 billion, with sales reaching £2.95 billion in the first half of the year, reflecting an 8% rise from £2.73 billion during the same timeframe last year.

By the conclusion of trading in London on Monday, shares of Rightmove had increased by 27.4%, translating to a rise of 152.40p, reaching a price of 708p and valuing the company at approximately £5.6 billion. REA Group announced on the Australian stock exchange that it was contemplating a cash-and-shares proposal for the British property portal.

In a release to the London Stock Exchange following the day’s trading, Rightmove acknowledged REA’s communication, emphasizing that “any offer for Rightmove is governed by the City Code on Takeovers and Mergers,” noting that REA must finalize an offer or retract by 5pm on September 30.

Founded in 2000 by Countrywide, Connells, Halifax, and Royal & Sun Alliance estate agencies, Rightmove became publicly traded on the London Stock Exchange in 2006.

Rightmove has established itself as the premier platform for home seekers in Britain. In the first half of 2024, the portal held an impressive 86% share of the housing search market, with revenues climbing 7% to £192.1 million compared to the same period last year.

Pre-tax profits also saw a 2% increase, totaling £132.7 million. Rightmove boasts substantial margins; for every £1 spent by estate agents and developers, the company made 69p in profit during the first half of the year. Approximately 19,000 estate agents and developers utilize the platform to advertise.

REA Group is predominantly owned by News Corp and stands as one of the top 20 companies listed on the Australian stock exchange, with a market valuation of A$27.3 billion (£14 billion). The previous month, REA announced substantial growth in annual earnings and an increase in dividends.

“The board recognizes that there are significant similarities between REA and Rightmove, especially in their dominant positions within the core residential sector,” REA stated in its announcement.

The speculation surrounding the potential takeover was first reported in the Street Talk column of the Australian Financial Review, which indicated that REA had engaged Deutsche Bank as a financial advisor as it explores a major transaction.

The South Korean automobile manufacturer has announced plans to expand its hybrid lineup to as many as 14 models, anticipating a surge in demand, particularly in North America. The company has set a new hybrid sales target of 1.33 million units by 2028, increasing its goal by 40 percent.

In contrast, Hyundai is maintaining its electric vehicle (EV) sales projection of two million units by the close of the decade.

The automaker is also venturing into the extended-range electric vehicle (EREV) segment, which has gained traction in China, offering a range exceeding 900KM on a full charge. Mass production of these vehicles is slated to begin in North America and China by late 2026.

Jaehoon Chang, Hyundai Motor’s president and CEO, remarked, “Recently, the speed of conversion to electric vehicles has been slowing. As a result, demand for hybrids is increasing, and hybrids are becoming a basic option rather than an alternative to internal combustion engines.”

This announcement from Hyundai, recognized as the world’s third-largest car manufacturer, coincides with Polestar’s recent governance changes. Polestar, an EV producer that emerged from Volvo two years ago, is reorganizing its management following a series of delayed product launches and unmet delivery expectations.

Michael Lohscheller, the former head of Opel, will succeed Thomas Ingenlath as chief executive of Polestar starting October 1. This leadership transition comes as Polestar initiates a significant cost-reduction strategy aimed at achieving profitability and positive cash flow by next year.

Additionally, the electric vehicle market faced challenges as Lotus Technologies, part of the British sports car brand Lotus Group (owned by China’s Geely and Malaysia’s Etika Automotive), reduced its annual delivery forecasts by over 50 percent, citing the uncertain impact of new tariffs in the US and EU.

BYD Reports Increased Profits

In related developments, BYD, China’s largest electric vehicle manufacturer backed by investor Warren Buffett, has reported a nearly 24 percent increase in half-year profits, despite significant discounts on its top-selling models.

Based in Shenzhen, BYD, which briefly surpassed Tesla to become the leading electric vehicle maker earlier this year, noted a net profit of 13.6 billion yuan (approximately £1.4 billion) for the six months ending in June, reflecting a 24.4 percent growth compared to the same timeframe last year. Sales rose nearly 16 percent to 301 billion yuan.

BYD’s growth has primarily been fueled by its domestic market, where it accounted for six of the ten best-selling electric vehicles in China last year. However, the company may face obstacles in Europe following Brussels’ proposal to impose substantial tariffs on imports of Chinese-manufactured electric vehicles, including a potential 27 percent duty on BYD’s vehicles.