Exodus from London Stock Exchange set to continue as travel operator wants to exit

By Louis Goss

Tui Group has called on investors to vote in favor of plans to delist the company from the London Stock Exchange, amid an exodus of firms from the troubled bourse on concerns over low valuations and a lack of liquidity.

If approved, Tui's proposals would see the German travel company shift its primary listing onto the Frankfurt Stock Exchange in June 2024.

The Hanover-headquartered airline said its plans are aimed at boosting liquidity and simplifying its ownership structure following a market shift that has in recent years seen 77% of all trading in Tui shares take place in Germany.

Tui (UK:TUI) shares increased 1% on Tuesday, after the company outperformed analysts' expectations, posting a 14.7% uptick in revenues to a record high of EUR4.3 billion. Shares in Tui have fallen 33% over the past 12 months.

In order to be approved, the proposals now require the support of a supermajority of 75% of Tui's shareholders, in a vote that will take place during its annual general meeting on Tuesday.

If completed, Tui's exit will come as another blow to the LSE, which some analysts have said is now in a "doom loop," as major companies have increasingly started to shun Britain's main bourse.

Analysts at Peel Hunt, led by Charles Hall, have argued a lack of initial public offerings (IPOs) on the LSE has led to a drop in liquidity that is in turn leading to low valuations, as investors are increasingly pulling their money out of U.K. equity funds.

In a roundtable attended by MarketWatch in November, London Stock Exchange Group CEO David Schwimmer hit back at the notion Britain's top market is in decline, instead blaming the wider global macroeconomic environment.

Schwimmer also challenged the notion that the LSE suffers from low valuations and a lack of liquidity, as he instead said companies were opting to turn away from the market due to the U.K.'s executive compensation practices and a negative media environment.

Concerns over the state of the LSE follow a series of blows to the stock market that have seen an array of top companies either switch their primary listings over to U.S. markets or instead simply opt to avoid the U.K. exchange entirely by having their IPOs in New York.

In August 2023, British microchip designer Arm Holdings' (ARM) decision to list on the U.S. Nasdaq was seen as a major blow to the LSE, following extensive efforts by the U.K. government to persuade the Cambridgeshire tech company to launch its IPO in London instead.

Decisions by two of Ireland's top companies - building materials seller CRH (CRH) and cardboard packaging maker Smurfit Kappa (IE:SK3) - to switch their main listings to the New York Stock Exchange in 2023 were also seen as major blows.

Irish gambling giant Flutter Entertainment's (UK:FLTR) April 2023 decision to switch its secondary listing from the Euronext Dublin to the NYSE also heightened fears the FTSE 100 company may also drop its primary London listing altogether in the near future.

Worsening its problems, the LSE has over the previous years suffered a series of outages that have halted trading on the market.

The LSE's data and analytics business currently generates the bulk of firm-wide revenues following its $27 billion acquisition of Refinitiv in 2021.

LSEG was approached by MarketWatch for comment.

The London Stock Exchange (UK:LSEG) saw its stock fall 1%, though it's gained 15% over the last 52 weeks.

-Louis Goss

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02-13-24 0827ET

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