Sunak set to tear up stock exchange rules in bid to attract tech bosses to London to float their firms
Chancellor Rishi Sunak is set to tear up current stock exchange rules to boost the City of London.
Ahead of today’s Budget, Sunak will publish a review by Jonathan Hill that backs relaxing the listing rules. The UK wants to challenge the Nasdaq in New York and become a hotspot for tech entrepreneurs looking to float their companies.
Many founders find London rules too rigid and do not want to give away too much control to investors.
City shake-up: Ahead of today’s Budget, Sunak will publish a review by Jonathan Hill (pictured) that backs relaxing the listing rules
To appease them, the review recommends dual-class shares, allowing founders to keep control by giving them casting votes on decisions such as corporate takeovers.
Lord Hill, a former EU financial services commissioner, also recommends cutting the minimum level of free float from 25 per cent to 15 per cent.
Some companies have been deterred from listing in London given the requirement to float at least a quarter of the group.
And the review calls for rules to be liberalised to encourage special purpose acquisition companies – SPACs – to come to London.
These raise money from investors and list on the stock market before looking for acquisitions. They have become one of the hottest areas of finance in the past year but the craze is centred on Wall Street not London.
Sunak said: ‘We asked Lord Hill to lead this review because we wanted bold ideas. The UK is one of the best places in the world to start, grow and list a business and we’re determined to enhance this reputation now we’ve left the EU.
‘That means boosting the business environment and making sure we continue to lead the world in providing open, dynamic capital markets for existing and innovative companies.’
The proposals have been welcomed by the City, especially by brokers and bankers eyeing a fortune.
Neil Wilson, analyst at Markets, said: ‘They’ve been looking at New York for some time and asking: “How do I get a piece of the action.” It will also help tech companies come to market earlier.’
Others were more cautious. Jasper Berry, at WH Ireland, said: ‘Companies list in the US because there is so much more capital – investors throw money at tech firms, so they can get a higher valuation. UK firms will always be tempted by that.’
Hill spoke to several UK tech firms, including Oaknorth and Transferwise, to ask how they could make a London IPO more appealing.
He said: ‘The proposals encourage investment in UK businesses and support the development of innovative growth sectors such as tech.’