London eases IPOs to stay competitive after Brexit

Posted on Dec. 2021 at 18:48

London continues to work on its attractiveness after Brexit. The UK regulator, the Financial Conduct Authority (FCA), has announced further relaxation of rules to attract more IPOs. The Chancellor of the Exchequer, Rishi Sunak, has promised the London financial center to take advantage of its new regulatory freedom to offset the effects of Brexit.

The new rules announced Thursday, the result of months of consultations, stem from Lord Hill’s recommendations in his report published in March. More specifically, they plan to authorize share structures with multiple voting rights in the premium listing segment (the most regulated and liquid segment where the largest companies are generally listed) of the London Stock Exchange. Enough to give the founders of start-ups increased voting rights to keep control of their company. In any case, that’s a feature of the New York market, which has attracted a lot of tech companies.

London more accommodating

Another important development: the minimum share of shares held by the public will be lowered to 10%, from 25% until now. In this regard, London would become more accommodating than Euronext, which requires the issuer to make at least 25% of the securities available to the public. Finally, the minimum quotation in market value will be raised from 700,000 pounds to 30 million pounds for the standard and premium segments, so as to “give more clarity and confidence to investors”, explains the FCA.

The announcements follow a first round of decisions taken in August to attract more PSPCs, those empty shells that are raising money to buy companies. London notably relaxed the rules for suspending listing when it announced the acquisition of a target. A sensible subject.

56 IPOs

Despite the Brexit, the place of London has shown dynamism in terms of IPOs. The London Stock Exchange (LSE) has registered 56 introductions since the start of the year, raising new money so far reaching £ 6.6 billion. Thus, in 2021 there will have been more operations than in 2020 (34 introductions for 8 billion raised), and even in 2019, before the pandemic (26 introductions for 4 billion raised).

But the London Stock Exchange believes that we must go further in this regulatory development. “We can do more,” responded Julia Hoggett, Managing Director of the London Stock Exchange. We hope to continue the dialogue with the authorities and other partners to ensure that the regulatory regime meets the evolving needs of businesses, ”she said. In his other recommendations, Lord Hill had for example proposed to simplify the prospectuses.

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