Ocado Group PLC (LSE:OCDO) and St James's Place PLC (LSE:STJ) will drop out of the FTSE 100 in the quarterly reshuffle that takes place next week.
Index organiser FTSE Russell said Darktrace PLC (LSE:DARK) and Vistry Group PLC (LSE:VTY) will replace them in the blue-chip index.
Darktrace is set for only a temporary stay in the top index as it has agreed to a takeover by US private equity business Thoma Bravo, due to be completed later this year.
Flutter Entertainment PLC (LSE:FLTR) will soon also be deleted from the FTSE 100, as it opts to move its primary listing to New York and move to a standard listing in London.
FTSE Russell announced that fund supermarket Hargreaves Lansdown PLC (LSE:HL.) will therefore is set to rejoin the blue chips from Friday, after six months out of the London benchmark.
Four companies are expected to be demoted from the FTSE 250 into the small-cap realms: Ukraine iron ore producer Ferrexpo PLC (LSE:FXPO), National Express owner Mobico Group PLC (LSE:MCG), NextEnergy Solar Fund Ltd (LSE:NESF) and Octopus Renewables Infrastructure Trust PLC (LSE:ORIT).
They are likely to be replaced by currency specialist Alpha Group International PLC (AIM:ALPH), Brunner Investment Trust PLC and Liontrust Asset Management PLC.
The indicative changes were announced to the FTSE 100 and FTSE 250 overnight, based on data as of Friday 24 May, but the actual review of the FTSE UK indices will use data from the end of next Tuesday 4 June.
Confirmed rebalance changes will be announced after market close on Wednesday 5th June 2024.
Shares in Ocado are down 44% year to date and St James’ Place's are 24% lower.
While there’s been an improvement in the retail side for its Ocado Retail joint venture and continued slow but steady progress for its Solutions robotic-warehouse arm, potential legal action looming with M&S seems to have knocked sentiment.
"Deals are also not being signed as fast as investors were hoping on for its future growth engine, Solutions," says Susannah Streeter at HL. "There’s still big potential here, but timeframes of growth look more questionable and that’s knocked the valuation. It’s led to speculation that the company may pursue a listing in the US instead, which appears to be behind the boost in its share price this week."
St James, meanwhile has had a torrid 10 months, prompted by concerns about its business model following the introduction of the new UK consumer duty last summer which imposed a legal requirement to treat customers fairly, with a rise in complaints leading to the dividend being slashed as it set aside £426 million for potential client refunds.
Housebuilder Vistry is poised to enter the FTSE 100 as shares rise 37% year to date, though they are still down from their pre-pandemic high.
"With interest rate cuts eyed on the horizon, house prices have begun edging up again and confidence is tentatively returning to the housing market. Vistry’s aiming to build 18,000 new homes by the end of the year, an increase on last years’ total," says Streeter.
Ukrainian iron ore miner Ferrexpo looks set to be demoted from the FTSE 250, although it appears to have overcome many of its production operational issues, but now been mired in legal challenges, with shares down by more than 51% since the start of the year.
National Express owner Mobico's shares are down by around 30% since the start of the year as confidence has ebbed away following amid accounting issues and other operational challenges.
Venture capital investment firm Molten Ventures PLC (LSE:GROW) and pensions consulting and administration services firm XPS Pensions Group PLC (LSE:XPS) could also be in line for promotion to the FTSE 250.