UK stock market shrinking fast as bidders raid FTSE 350

The accelerating trend of UK takeover activity today included a former FTSE 100 business after Edinburgh-based Capricorn Energy (LSE:CNE) backed a £271 million swoop by Genel Energy (LSE:GENL).

The proposed price for Capricorn, which was worth £25 million when it listed in 1988 under the name Cairn Energy, is a 34% premium to its level in March prior to bid speculation.

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The transaction adds to the UK market’s 29 ongoing bids with a total value of £61 billion so far in 2026, which compares to 40 in the whole of 2025 worth £35 billion.

This year’s targets include FTSE 100-listed Schroders (LSE:SDR), Beazley (LSE:BEZ) and Intertek Group (LSE:ITRK), as well as FTSE 250 stocks Tate & Lyle (LSE:TATE), easyJet (LSE:EZJ) and Senior (LSE:SNR). Overseas bidders represent about 62% of the total.

City firm Peel Hunt said yesterday that the current exceptionally high level of deal-making had taken the total since the start of 2023 to 154 bids with a value of £165 billion.

Over the same period, there have been just 11 initial public offerings (IPOs) of companies with a market cap of more than £100 million, representing an overall value of £6 billion.

It said: “To say that the UK has a problem in retaining its companies and listing new ones would be a massive understatement in our view.”

There has been one new listing worth £100 million so far this year, with several potential newcomers likely to have been put off by the uncertainty of the Middle East war.

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Peel Hunt says a number of larger companies are still looking to list in the UK later this year, although the rate of merger and acquisition (M&A) activity is on course to be materially larger.

The bank warns that more UK companies are set to list in the US this year rather than in the UK.

Since the start of 2023, there have been eight UK-based companies choosing to IPO overseas with a market cap of £330 billion. The UK has also seen seven large companies move their listing, taking £120 billion of market cap with them.

Peel Hunt said: “The scale of an equity capital market really does matter. As the US becomes a larger proportion of global indices, it attracts more funds, more companies, and more attention.

“The converse is also true. As the UK becomes a smaller proportion of the MSCI World (currently 3.5%), there will be pressure to reduce exposure. The launch of mega-IPOs in the US will inevitably exacerbate this trend as they increase free float and enter indices.”

Efforts to make the UK an attractive listing venue have included regulatory change, alongside recognition that savers in the UK are too risk averse and under-exposed to growth assets.

The bank believes turbocharging UK equity markets can be done at pace by using multiple levers around pensions, ISAs, capital gains tax and stamp duty.

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Today’s takeover deal involving Capricorn and UK-listed Genel creates an independent energy company of scale in the Middle East and North Africa.

Capricorn is now a cash flow-focused energy producer, with a portfolio of development and production assets in the Egyptian Western Desert.

As Cairn Energy, the company delivered huge returns for shareholders after its Rajasthan project became the largest onshore discovery in India for more than 25 years.

Cairn joined the FTSE 100 index in 2004, when it replaced Bradford & Bingley, and after a promotion and relegation in 2005, eventually lost its blue-chip status in 2012.

Between 2006 and 2012, $4.5 billion (£3.6 billion) was returned to shareholders as the Indian business was spun off into a separate listing and a majority stake then sold.

It later made the largest global offshore discovery of 2014 in Senegal, and participated in the development of two of the largest projects in the UK North Sea, Catcher and Kraken, which began production in 2017.

Capricorn was impacted by a long-running tax dispute in India and in 2022 came close to completing a £1.4 billion merger with Tullow Oil.

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The addition of its portfolio to Genel’s Kurdistan assets results in pro-forma reserves of 117 million barrels of oil equivalent and production of 41,003 barrels of oil per day.

Since his appointment three years ago, Capricorn CEO Randy Neely said the company has returned approximately $600 million to shareholders, reduced costs and maximised value from the Egyptian asset base.

However, he said Capricorn requires greater scale to materially improve trading liquidity: “We believe the transaction with Genel crystallises the value created by Capricorn while providing shareholders with a clear and efficient exit.”