The publication of the Hill review this week was an enormously exciting development which we can be optimistic will pave the way for an increase in IPOs and the attractiveness of London as the global listing venue of choice.
The UK Listing Review, chaired by Lord Hill was undertaken as part of the Chancellor’s aim to strengthen the UK’s position as a world financial centre. It examined how companies raise equity capital on the UK public markets and has resulted in a series of recommendations at the same time it strikes a balance maintaining a high standard of corporate governance, shareholder rights and transparency.
The key recommendations are:
- Lowering of the free-float from the current 25% to 15%. The current London position did not compare favourably with other markets such as Nasdaq in the US.
- The permission for dual-share class structures. This will be attractive to founder-led businesses but will be subject to certain restrictions.
- Re-branding of the Standard Listing segment. Great news as the Standard Listed segment is very much known as the “wild west” of the London Stock Exchange’s market.
- Shortening of financial track record (currently three years) for premium listed companies to allow high growth companies to benefit from a London listing.
- Special purpose acquisition vehicles – relaxing of the Listing Rules to stop the current suspension requirement on acquisition. Currently, investors in SPACs become trapped until a further prospectus is published and there is sufficient information in the public domain on the target.
- A fundamental review of the prospectus regime so that in future admission to a regulated market and offer to the public are treated separately. This gives the potential for more flexibility with respect to use of the London public market and the types of business that are attracted to it.
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