The London Stock Exchange has published a draft rulebook for the High Growth Segment, the Main Market segment for high growth companies.
We heard last year that the UK government was considering the possibility of relaxing rules for high-growth companies on the LSE. David Willetts, the MInister of State for Universities and Science said last year that the government had been looking at the American JOBS act and rules for listing on competitors like NASDAQ and that progress could be made for making a better public listing environment.
The current document is available on the London Stock Exchange site and views are being sought from market participants before the launch of the segment in March.
The High Growth segment has been designed to meet the needs of fast-growing companies looking to join the Premium segment of the UKLA’s Official list.
According to the London Stock Exchange, market feedback from investors, sell side participants and the venture capital community says that a number of UK and European businesses are currently under-represented on the equity markets.
The draft rulebook carries criteria that the London Stock Exchange hopes will make things a bit easier. For companies to be eligible, they will have to meet criteria including; historic revenue compound annual growth rate of 20 percent or more over a three-year period, a minimum free float of ten percent and publication of an approved prospectus, among other things.
The government is still pushing to make the UK and London known as attractive hubs for tech companies. Just yesterday, Mayor of London, Boris Johnson opened the London Stock Exchange and discussed his thoughts on the appeal of London over US cities for tech businesses.
With the usual aplomb he told CNBC, “I don’t think people have focused on London’s growing dominance in the tech sector, in life sciences, in bio-tech and that is something that we need to have properly supported by financial investors….we’ve been trying to make the case for investors around the world to look at these businesses and for these businesses to list on the London Stock Exchange ”
When asked about the appeal of Tech City in London over places in the USA Johnson said, “I’ve just been to Silicon Valley looking around, I can’t see the quality of life for these young brilliant minds is so much higher, you’ve got lots of donut shacks and Pizza Huts and roundabouts, it looks like anywhere else to me. I think London’s far more attractive as a place to live.”
In slightly more sober terms, Greg Clark MP, Financial Secretary to the Treasury said, “The government is committed to making the UK the best place in the world to start and grow a business. High growth companies are a key driver of job creation, and these companies will be vital to delivering the recovery. Government has reformed EIS, SEIS and Entrepreneurs’ Relief, to sharpen the incentives to start and invest in companies with big ambitions.”
He continued, “We are delighted that London Stock Exchange is taking action to ensure that London’s public markets are organised to help these companies fuel their growth. The UK has a world leading crop of high growth businesses, and the announcement of the High Growth Segment today by London Stock Exchange is an important step in creating the right environment for them to IPO in London.”
Naturally the Tech City Investment Organisation (TCIO) is also supporting the draft. TCIO CEO and UK Business Ambassador, Joanna Shields says that she welcomes the news, “London is the digital capital of Europe, home to a new generation of entrepreneurs and business builders who aren’t waiting for the economy to bounce back, they are taking control of their own destiny and charting their own path to success.”
She continued, “Today’s announcement will help them write their next funding chapter here in London. The LSE’s move sends a strong signal to overseas firms that Britain is open for business and builds on what is one of the world’s most ambitious packages of business and investment incentives, tax credits and rate reductions.”
The full rulebook together with details of how to submit responses is available to download from the London Stock Exchange website. Interested parties are invited to comment by close of business on 8 March 2013.
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