THE London Stock Exchange could be stripped of smaller companies by 2028 if the pace of a current "feeding frenzy" continues, according to a top investment bank.

In a note to investors, broker and City bank Peel Hunt said that the "relentless" speed of "deequitisation" in London showed no sign of abating and was now threatening to decimate the smaller end of the market.

"If we extrapolate the current trend line, then the last company will leave the FTSE Smallcap [Index] in 2028," said Charles Hall, Peel Hunt's head of research.

"This all sounds very negative - but the reverse scenario can happen and can happen quickly. It really needs a trigger to break the cycle."

Hall added that there had been a "feeding frenzy" on the market in recent months as cashed-up corporate buyers pounce on lowly valuations in the City.

A total of 12 new companies came under offer in the first three months of this year and some 28 firms were subject to takeover bids last year. Over 150 companies left both the main market and AIM last year, according to the Quoted Companies Alliance.

(c) 2024 City A.M., source Newspaper