Is this really a thing? I guess that it must be these days having read a few of the comments (I will admit that I haven't entirely RTFT).
When I graduated from a college that was part of London University, the graduation ceremony was held at the Royal Albert Hall (the place where the Proms are held).
There was definitely enough space there (it holds upwards of 5,000 people). At the time, there were around 2,000 undergraduates who graduated each year.
As I understand it, the university has grown considerably since then and there are typically 8,000 undergraduates who graduate each year, these days.
[Part of that growth is that they have absorbed other, previously separate, institutions such as the School of Pharmacy (SOP), the School of Slavonic and East European Studies (SSEES), and several medical schools (including UCH, Royal Free, Middlesex, and the London School of Medicine for Women)]
But, even so, to go from around 2,000 people graduating each year to 8,000 people graduating each year just shows how much some universities have grown since then and how many overseas students there are. According to the college's own figures, slightly less than half of their undergraduates come from the UK these days.
Although, I do understand that they now hold their graduation ceremonies (plural) at the Royal Festival Hall which only holds around 2,500 people. So perhaps they also do have similar arrangements these day?