Government bid to attract more hi-tech companies to float in the City

Published on 21/09/2012 00:00

THE UK government plans to make it easier for technology firms to list their shares in London in an attempt to stem the flow of high-growth companies heading across the Atlantic in search of capital.

Europe has seen a slowdown in initial public offerings (IPOs) generally over the past two years, as eurozone debt worries buffeted stock markets, and some technology firms have ditched their attempts to go public in Europe in favour of the United States – a more well established hub for tech flotations.

“There is a rich crop of innovative European high-tech companies that will be going to the financial market over the next few years. We’re determined to make sure that as many as possible should do an IPO and float in the UK, not elsewhere,” David Willetts, the universities and science minister, said.

Plans developed with the London Stock Exchange are likely to include a new route to the stock market for high growth companies, particularly internet and technology businesses, and changes to rules on free float, eligibility criteria and reporting requirements.

The aim is that this route will act as a “launch pad” for European mid-sized high growth businesses seeking a full premium listing on London’s main market, the government said.

The move follows US President Barack Obama’s Jobs Act earlier this year, which reduced the regulatory requirements for small companies going public on US stock exchanges.

The British government’s changes, aimed at making the UK an equally attractive place for companies to raise capital, are part of its broader quest for economic stimulus and employment growth that could inject some life into the moribund economy.

“The quality of the entire business ecosystem will improve if the UK remains globally competitive, and particularly so with the US, so that we retain more of our best tech companies and all the jobs and revenues that they create,” said Reshma Sehoni, partner at Seedcamp, which invests in early stage tech firms.

The government said it would also review regulations which may be deterring investors from funding growth companies, and would work with LSE to try and widen the availability of equity capital for both UK and international businesses in London.

• Housebuilder Crest Nicholson is said to be eyeing a return to the London stock market five years after it was taken over during the housing crash.

A source said a flotation, potentially giving the firm a valuation of at least £500 million, was being explored in the wake of rising profits at listed rivals such as Barratt and Persimmon.

Crest was taken private by Scottish entrepreneur Sir Tom Hunter and HBOS in 2007 and is now majority owned by US distressed investment fund Varde Partners.