IPO regulation shake up – Is this the revitalising blend the London Stock Exchange has been craving?

IPOs, the appeal and the legal process

An Initial Public Offering (IPO) is the event in which a private company converts to a public company by offering a portion of its ownership through newly issued shares [1]. Existing shares can also be sold during the IPO, allowing incumbent shareholders a partial or full exit [2]. Not only does this raise significant capital for the company, but it offers the public a chance to buy shares in a company as soon as it enters public markets, often at the initial offering price. However, a company’s switch from private to public does not happen overnight and requires a strict legal process to be followed.

First off, Articles of Association must be updated to meet public company requirements, along with ensuring that the structure, ownership and the board meets the necessary listing requirements. The core qualifications for a publicly listed company are explained here [3]. Furthermore, due diligence must be carried out, in terms of hiring a legal team to check all key contracts, intellectual property and regulation specific compliance like adhering to UK GDPR rules[4].

Only once this has been done can a prospectus be drafted. This is a legally required document containing all the financial, business, risk and management information investors need to make informed decisions. Any misleading statements have severe consequences under the Financial Services and Markets Act 2000 [5], specifically Section 397 [6]. Finally, once all these measures have been followed, the application can be submitted to the relevant stock exchange and undergo necessary vetting by the Financial Conduct Authority (FCA).

Flow chart simplifying the IPO legal process

IPO London Stock Exchange (LSE) recent slump

To illustrate the recent IPO slump, London only accounted for 5% of IPOs worldwide between 2015 and 2020, and the number of listed companies in the UK had dropped by about 40 percent since its peak in 2008 [7]. Moreover, in 2024 the UK IPO market struggled further, with only 18 companies listing on the London markets, down from 45 in 2022 and 126 in 2021[8].

This demonstrates a significant IPO gap, compared to countries like the US. Although the US experienced a decline in IPO activity from 2022 to 2023, there was an increase in IPOs in 2024 and 2025, with 146 IPOs raising around 29 billion dollars [9]. While the US stock markets are undoubtedly larger and attract greater investment due to their scale, it is important to recognise that the decline in IPO activity on the LSE sharply contrasts with the notable increase in IPOs on US markets over the same period.

Graph depicting the significant gap in IPOs listed in the UK and US between 2022 and 2024

A recent case study illustrating a promising IPO that chose to bypass the LSE in favour of a US market – the New York Stock Exchange (NYSE) – is that of the UK fintech firm Wise. Wise’s CEO Kristo Käärmann cited that higher valuations and deeper liquidity in the US market meant there is greater investor demand for tech companies there [10]. In other words, the high number of buyers and sellers interested in tech stocks on the NYSE, means shares can be sold quickly without having to lower the price excessively. This heavy interest creates investor confidence, as trading shares later will be easier.

The IPO picture in 2025, and cause for optimism?

For the year 2025 to date, there have been 12 listings on both the LSE main market and a global sub-market of the LSE called the Alternative Investment Market [11]. Although this represents a significant 65.6% decrease in proceeds compared to the £579 million raised during the same period in 2024, there is reason to be optimistic. Contextual factors like prolonged geopolitical and macroeconomic instability [12] (as touched upon in a previous article[13]), partly explains the muted conditions in 2025.

Scott McCubbin, EY-Parthenon UKI IPO Leader, supports this view, explaining that following on from market uncertainties [14], the IPO pipeline for the next 6 to 12 months is strengthening as market conditions improve. He highlights that London’s depth of capital and international investor base will help promote its appeal as a listing venue, despite the competitive global IPO market [15].

A recent investor ‘vote of confidence’ in the LSE, was fintech-enabled specialist lender Shawbrook Group Bank Plc choosing to float on the LSE on October 31^st, 2025, through an IPO, with shares jumping 8% during early trading[16]. Even though this is the biggest LSE IPO of the year, it is still very early days, and only time will tell whether this can be hallmarked as a success.

Nevertheless, there is certainly a renewed optimism building over the LSE IPO scene, and in tandem with this, it is now important to explore how legal reforms can further bolster this growth in the next section.

Regulation shake up

The Financial Conduct Authority (FCA) has published a new regulatory framework [17] that should allow for a freer-flowing regulatory environment to attract more IPOs to the LSE. Changes include that for an IPO involving a retail offer (company offering shares to the public), the prospectus only needs to be made available to the public three working days before the offer ends, reduced from six working days.

This will consequently result in a greater number of individual investors engaging with IPOs, since the current long time period heightens uncertainty of success in the event of market fluctuations [18]. A shorter waiting period between the publication of the prospectus and the closing of the offer provides investors with sufficient time to review the prospectus details while minimising the gap for potential market change [19].

Moreover, after a Company has gone public, under the new FCA proposed regulations [20], companies only have to publish a full FCA-approved prospectus if the new shares exceed 75 percent of the total value of those already trading. This is a significant increase from the previous 20 percent [21] and will therefore make it much easier to raise capital post-IPO, as the administrative and costly burdens of producing such a document will be reduced, thanks to the relaxed threshold.

Looking ahead and final thoughts

In light of a struggling LSE IPO market, the fact that these new regulations will take effect on 19^th January 2026 should spark excitement for both investors and companies alike. Despite the independence of the FCA, the fact it is accountable to the UK government [22], suggests these regulations are likely influenced by UK pro-investment sentiment. Building these links are very important, as it helps gauge the legal and political tools available to help boost the UK economy.

These regulations and maintaining an optimistic outlook are key, since over the next year there will be a battle to retain UK-based companies that are exploring IPOs elsewhere. For example, UK-based fintech company Revolut initially showed reluctance to listing in London, with CEO Nikolay Storonsky describing listing on the LSE as ‘not rational’ in December of 2024 [23]. However, due to the progressive regulatory changes described earlier on in this article, Revolut at this point in time is considering an IPO that could see it listed in both London and New York, with a valuation near 75 billion US dollars [24]. This is known as a 'dual IPO listing' and is a promising development that should incite optimism.

In addition, the theme of analysing fintech IPOs throughout this article has allowed for consistent evaluation of relevant market trends and dynamics.

Finally, staying up to date with IPO regulation, and the health of the LSE, is a worthy ‘investment’ of your time. This is because links can be made not only to legal reforms but also economic policies and political factors. This is demonstrated by Reeve’s attempt to boost the UK economy through trying to secure an increase in promising LSE IPOs [25].