Response to Lord Hill’s UK Listings Review
Lord Hill’s UK Listings Review published on Wednesday comes at a crucial time for our economy. Post-Brexit, Britain has an opportunity to re-frame its economy, adopting forward-looking regulatory frameworks that foster innovation and encourage successful companies to list in the UK.
The world is rapidly and unerringly moving towards a tech-driven economy, a phenomenon that accelerated in the past year. It is therefore extremely positive that the past decade has seen the UK tech start-up ecosystem strengthen to the point that today it leads Europe from a tech innovation and investment standpoint, with UK based start-ups attracting £10.5 billion in capital last year. However, as Lord Hill mentioned in his letter to the Chancellor, between 2015 and 2020, London accounted for only 5% of IPOs globally, whilst the number of listed companies in the UK has fallen by 40%.
Our world-leading scientific research institutions have given rise to a steady stream of start-ups, but our late-stage tech ecosystem has been haunted by a recurring theme. All too often British tech companies are acquired at mid-scale valuations by overseas companies, rather than opting to grow into multi-billion dollar assets here in the UK. Stringent listing rules and a lack of tech knowledge amongst UK financiers have undoubtedly deterred companies from listing in the UK, with most looking to the NASDAQ. When companies such as Graphcore – the British semiconductor company which could IPO at $10billion – are eyeing up a NASDAQ listing, the UK exchequer not only loses the chance to reap the benefits in tax receipts, but also the wider economic, employment and geopolitical benefits.
It is therefore heartening that the Chancellor, through Lord Hill’s review, is exploring the idea of changing the rules and regulations to encourage companies to list in the UK. As Lord Hill highlights, the UK urgently needs to attract more tech and life science businesses to its listings. Having founded several major tech companies in the UK, including Autonomy, Blinkx and Darktrace, I have a vested interest in seeing the UK succeed in this arena and firmly believe that we must do so if the UK is to retain its pre-eminence on the global stage.
Many of the recommendations made by Lord Hill, particularly the easing of free float requirements, dual class share structures and the re-branding of the standard listings segment of the market, would undoubtedly make a positive contribution to the ecosystem.
Mike Lynch OBE FREng FRS