- Suggests more could be done to encourage tech companies to float in the UK
- Research shows why Lord Hill’s review into listing requirements is so important
Fewer than 4% of the UK’s fastest growing technology businesses over the last 20 years have been floated on the London Stock Exchange, shows new research from accountancy and business advisory firm BDO LLP.
Of the UK’s 1,200 fastest growing technology companies* of the last two decades, only 43 have gone on to float on the London Stock Exchange (based on identifying the 100 fastest growing technology businesses in each year for the past 20 years). 660 of these businesses have remained under private ownership.
Whilst it is encouraging news that Deliveroo, the food delivery app, and Darktrace, the AI cyber security business, have announced listings on the London market this year, Tony Spillett, Partner and National Head of Technology and Media at BDO LLP, says these are relatively rare exceptions.
The research is further evidence UK equity markets are missing out on many of the potentially successful technology businesses of the future. A low number of IPOs amongst UK tech businesses mean UK stock market investors are being deprived of the opportunity to directly invest in fast growth UK technology businesses.
Tony Spillett says that the research explains why Lord Hill’s review into listing requirements is so important as the UK is not attracting enough tech businesses onto its public equity markets.
Among the recommendations set out by Lord Hill include:
- Allowing companies to list on the LSE’s premium listing segment with dual class share structures – giving founders of businesses greater voting rights on certain decisions
- Reducing the free float requirement from 25% to 15%
- Conducting a substantial review of the prospectus regime so that admission to a regulated market and offers to the public are treated separately in future
Tony Spillett adds: “If you believe that listing fast-growing tech companies on the stock market is an important part of helping to deliver economic growth, then the UK is missing out.”
“UK investors are currently only able to access many tech businesses indirectly through private equity funds, a route which is not open to many.”
“Within the parameters of the current rules, the LSE has been trying hard to attract more high growth tech businesses onto the market. However, there is now a consensus that the listing rules do need to be reformed in a way that balances the interests of both tech entrepreneurs and investors.”
*Based on the Tech Track 100 Report – which each year ranks the Top 100 UK private technology, media and telecoms companies with the highest sales growth in the preceding three years
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