Capital markets provide a buffer against economic shocks by enabling efficient capital allocation, offering alternative financing sources, and attracting foreign investment.

The recent threat of US tariffs poses a significant risk to the UK and Ireland, with potential tariffs on UK goods raising costs for exporters and endangering jobs.

In Ireland, the impact could be even more severe, with the potential loss of 80,000 jobs if tariffs target the pharmaceutical sector.

As global trade routes become increasingly precarious, capital markets can play a pivotal role in sustaining domestic economic stability by mobilising investment and reducing reliance on foreign capital inflows.

Investment bank Peel Hunt has sounded the alarm on the urgent need for government support to revitalise the UK’s capital markets.

Since the beginning of 2025, 15 companies valued at more than £100 million have faced acquisition bids on the London Stock Exchange, amounting to approximately £9 billion in total.

Worryingly, not a single firm of similar value has gone public in that period.

This imbalance highlights the vulnerability of the London Stock Exchange, which is increasingly seen as a hunting ground for both corporate and private equity bidders rather than a thriving listing venue.

According to Charles Hall, head of research at Peel Hunt, the depletion of the UK small and midcap market is alarming, especially given the absence of IPO activity.

Hall emphasises that this shift from a robust capital market to an acquisition target environment is driven by low valuations and willing sellers, making urgent policy intervention essential.

Real estate under pressure

One of the most striking trends has been the wave of take-private transactions in the listed commercial property sector, particularly targeting real estate investment trusts (Reits). Private equity firms have been at the forefront of this movement, capitalising on discounted valuations and the strategic potential of real estate assets.

In the UK, notable transactions include Blackstone’s £700 million acquisition of Industrials Reit, aimed at consolidating industrial property holdings.

Similarly, Assura, a healthcare property Reit, attracted a £1.6 billion buyout proposal from a consortium led by KKR and Stonepeak Partners, highlighting the attractiveness of stable, income-generating assets.

Primary Health Properties (PHP), another Reit with considerable holdings in Ireland, as well as its home market in the UK, has now also launched a new bid for Assura, in a deal valued at £1.5 billion.

Another key example was the competitive bid for Warehouse Reit, which received a £470 million takeover offer from Blackstone and Sixth Street Partners.

Despite the rejection, it underscores the high level of private equity interest in logistics properties. Just this week Blackstone has raised its bid to £489 million, in pricing well received by shareholders.

In Ireland, the trend has been equally pronounced. Green Reit, Hibernia Reit, and Yew Grove Reit have all been taken private in recent years, largely due to persistent undervaluation and a lack of liquidity on the public market.

Dalata Hotel Group, a leading hospitality player, is currently reviewing its strategic options, with a take-private deal considered a likely outcome.

These moves reflect the challenges faced by Irish-listed property companies in achieving fair market valuations, pushing them towards private ownership where strategic restructuring can take place away from public scrutiny.

The primary drivers behind these take-private transactions are multi-faceted.

First and foremost, many publicly listed property companies have been trading at significant discounts to their net asset values (NAV), presenting private equity with an opportunity to acquire high-quality assets at relatively low costs.

Rising debt costs and the evolving commercial property landscape, especially in office and retail sectors, have pressured valuations, making these firms attractive targets.

Private equity firms, flush with dry powder and relatively low-cost financing, are exploiting these undervaluations. The strategic advantage lies not only in acquiring discounted assets but also in the flexibility offered by private ownership.

This allows for long-term planning and restructuring without the constant pressure of public market scrutiny and quarterly reporting. The appeal of income-generating, stable assets, such as healthcare and industrial properties, aligns well with private equity’s strategic objectives.

Urgent action needed

To counteract these trends, the Irish Equity Market Forum, a consortium of advisers, has proposed a series of revitalisation measures.

These include creating a Retail Savings and Investment Scheme akin to the UK’s ISA, aimed at boosting local investment.

Additionally, a proposed Irish Growth Capital Fund could mobilise domestic capital to support scaling enterprises. Fiscal incentives, such as a reduced Capital Gains Tax rate and tax credits for IPO expenses, would also encourage listings.

Reversing the decline of the London and Dublin stock exchanges requires bold, strategic action. Governments must collaborate with regulatory bodies to implement measures that enhance liquidity, improve market valuations, and encourage public listings.

Introducing tax-efficient investment schemes, fostering local institutional investment, and creating a supportive ecosystem for SMEs are critical to achieving this.

Ultimately, the goal is to restore these exchanges as vibrant centres of investment and economic innovation. Failing to do so risks further relegating the London, and not just Dublin, to peripheral roles in global capital markets, with long-term consequences for domestic growth and international competitiveness. Put simply, who is going to create the next Ryanair