Sunak to hail reforms aimed at luring tech giants

Mar 01, 2021

Rishi Sunak, the chancellor, will this week welcome a report that will call for major reforms to the London stock market’s listings regime in a bid to encourage more technology ‘unicorns’ to go public in the UK.

Sky News has learnt that a review headed by Lord Hill, a former EU commissioner, will recommend allowing tech entrepreneurs to retain greater control of their companies by formalising the creation of dual-class share structures.

Lord Hill’s review will be published on Wednesday, alongside the Budget, according to insiders.

One source said on Monday that Lord Hill had considered calling for the creation of a new high-growth segment on the London Stock Exchange to act as a focal point for tech companies with listing aspirations, although it was unclear whether this would be included in his final report.

Mr Sunak commissioned the report in November, arguing that the UK’s departure from the European Union at the end of last year would give it greater freedom to shape its financial services rulebook.

However, proposals to introduce dual-class share structures and reduce the minimum proportion of a company’s shares which trade on public markets – known as the free float – have met fierce resistance from corporate governance champions.

Ironically, Lord Hill’s review was commissioned just as the London market prepares to welcome an unprecedented pipeline of tech companies.

On Monday, Trustpilot, the ratings platform, confirmed a series of reports on Sky News about its plans to go public, while Deliveroo, the food delivery app, could confirm its planned flotation as soon as next week.

Darktrace, the cybersecurity group, is also planning to float in the coming months.

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Despite the wave of market debutants, London continues to lag far behind New York’s exchanges in terms of the volume of tech companies listing and the scale of fundraisings unveiled there.

One of the most striking trends in global equity markets in the last 18 months has been the deluge of so-called special purpose acquisition companies – SPACs – which have been used to take scores of tech companies public.

London’s listing rules largely prohibit such SPACs from going public in the UK, which Lord Hill is also expected to address in his report.

Last week, Ron Kalifa, a former executive at Worldpay, called for reforms to the listing rules by urging a reduction in the free float requirement, dual-class shares and a relaxation of pre-emption rights.

The Treasury declined to comment on Monday.

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