London stock exchange risks becoming a ‘backwater’ says Sir Martin Sorrell

The London Stock Exchange risks becoming a “backwater” by failing to maintain the interest of major companies, Sir Martin Sorrell has warned.

The head of advertising agency S4 Capital has said the city has lost its luster as bigger companies snub the market and others continue to look across the Atlantic for a better valuation.

“When you talk to fund managers, London is becoming a bit of a backwater,” Sir Martin (pictured) told the Mail.

“London is an increasingly unattractive market due to liquidity and scale issues.”

Instead, companies are heading to the United States, known for its higher prices and more slick processes.

British chip designer Arm avoided London for the US this year and Irish building products group CRH and Smurfit Kappa moved their major listings to US soil.

But Sir Martin, 78, has said he will not change S4’s London listing any time soon.

‘We must do our business well and that comes first. “There’s a reason American companies are valued more and it’s because they are better companies, with better track records,” he said.

‘If we transferred our listing to the United States, we wouldn’t get coverage. You are a smaller fish in a bigger pond.

But the advertising tycoon said the UK had become “too complacent” and urged the Government to make London more attractive for companies to list on the stock market. Sir Martin’s capital-listed S4 agency has struggled as clients cut their advertising spend.

The group issued a profit warning in November and the shares are down more than 70 percent in 2023.

But it’s not just Sorrell who appears to be increasingly disillusioned with the performance of the share price in London.

Dublin-based gaming giant Flutter is preparing for a secondary listing in the US this month as its US business continues to boom, while Tui and Pearson have suggested they could move to Frankfurt and New York, respectively.