UK IT sector loses £2.6bn in stock market value

UK IT sector loses £2.6bn in stock market value

Mergers have reduced the number of companies trading on London stock exchanges

The value of the publicly-listed UK computing sector has dropped by £2.6bn or 15 per cent over the past year, due to a significant increase in merger and acquisition (M&A) deals.

The number of IT companies listed on the London stock markets has fallen by 10 per cent since last March, as corporate takeovers removed firms from public trading.

One in three mergers to take place over the past 12 months has been a " public-to-private" deal, involving private equity buyers, according to research from Close Brothers investment bank.

The increase in M&A activity may stem from falling share values, which has lead small- and medium-sized companies to abandon public trading. But the falling value of the IT market is unusual, said Close Brothers director Paul Lewington.

"Normally, money from delisted stocks is recycled into new listings or other sector peers, but this is no longer the case and equity value appears to be leaving the sector altogether," said Lewington.

"The scale on which this trend is happening is startling.”