The London Stock Exchange plans to launch a new niche market that focuses on technology to lure some of the biggest names in the Internet business, such as Google, Facebook, or Twitter, in the UK.
The new scheme called “High Growth Segment” aims to let businesses raise cash while maintaining 90% of their shares, instead of the free float shares of at least 25% made available on the market, which is what LSE would normally require.
The UK government is said to be committed in making the country as the best place for businesses to grow.
The London Stock Exchange plans to launch a new niche market that focuses on technology to lure some of the biggest names in the Internet business, such as Google, Facebook, or Twitter, in the UK.
The new scheme called “High Growth Segment” aims to let businesses raise cash while maintaining 90% of their shares, instead of the free float shares of at least 25% made available on the market, which is what LSE would normally require.
The UK government is said to be committed in making the country as the best place for businesses to grow.
Financial Secretary of the Treasury, Greg Clark, stated:
“High-growth companies are a key driver of job creation, and these companies will be vital to delivering the recovery. The UK has a world-leading crop of high-growth businesses, and the announcement of the High Growth Segment today by London Stock Exchange is an important step in creating the right environment for them to IPO [initial public offering] in London.”
This action is said to be due to the government's concern over many of British technology companies hinting on a move to the Silicon Valley if the country does not become more attractive.
Silicon Valley is quite appealing to most tech companies with only 10% of their shares liable for listing on Nasdaq in the US.
Chief executive of the LSE, Alexander Justham, said that the new niche market would give companies additional choices and an opportunity for further success.
Deloitte's equity capital markets partner, John Hammond, added:
“Aim has been doing its job as an incubator for UK companies. What is exciting about the launch of the High Growth Segment is that larger UK technology and other high-growth companies now have a real alternative to a premium listing or joining Aim and that can only be a good thing for London. Debt markets have been constrained and are expensive to tap, particularly in Europe following the banking crisis. Many companies have been forced to look to their own balance sheets for expansion capital. Other UK tech business owners have turned to private equity investors for finance, though of course, they have had to cede some control of their business in doing so. The High Growth Segment should create a more level playing field and make the UK tech sector more competitive globally.”
UK business ambassador and Tech City Investment Organisation's CEO, Joanna Shields, also stated:
“London is the digital capital of Europe, home to a new generation of entrepreneurs and business builders who aren't waiting for the economy to bounce back, they are taking control of their own destiny and charting their own path to success. Today's announcement will help them write their next funding chapter here in London. The LSE's move sends a strong signal to overseas firms that Britain is open for business and builds on what is one of the world's most ambitious packages of business and investment incentives, tax credits and rate reductions.”
LSE's High Growth Segment is intended to be the medium-sized companies' stepping stone, which is said to be launched by March.
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