Rishi Sunak, the chancellor, is plotting an overhaul of the UK’s public company listings regime in a bid to lure more technology ‘unicorns’ to London.
Sky News has learnt that Mr Sunak is preparing to announce a review aimed at helping the City compete more robustly with New York’s vast capital markets in a post-Brexit era.
City sources said that Lord Hill, Britain’s former commissioner to the EU and a non-executive director of the Treasury, was this weekend being lined up to lead the review.
One banker suggested that the chancellor could announce the plan as soon as next week, with the Financial Services Bill scheduled to have its second reading in the House of Commons on Monday.
Reforms to encourage more high-growth companies to float in London have been under consideration in Downing Street for more than a year.
Among the proposals that Lord Hill is likely to consider are reducing the minimum ‘free float’ requirement for a premium main market listing – a move that would enable tech entrepreneurs to retain greater ownership of their businesses when they take them public.
The Treasury’s review would also be expected to pave the way for companies to list in London with ‘dual class’ share structures, a potentially controversial move that could raise corporate governance questions among institutional investors.
News of Mr Sunak’s plan will be welcomed by financiers, particularly as it comes just weeks after the City of London Corporation called for such a move.
“[The government should] conduct a regulatory review of equity listing structures to ensure the UK’s competitiveness relative to other listing locations,” the report, published last month, said.
“The goal should be to motivate equity listings in London, including within the tech sector where competition is particularly fierce, while maintaining high corporate governance standards.”
The recent initial public offering of THG Holdings, the owner of the online consumer goods retailer The Hut Group, involved its chief executive, Matthew Moulding, holding a ‘founder’s share’ which allows him to veto a hostile takeover bid for the company.
THG was not, however, permitted to have a premium London Stock Exchange listing because of its unusual capital structure.
The London bourse has been actively lobbying to amend the listings regime while ensuring that the City is perceived as offering robust protections for investors in terms of corporate governance standards.
The LSE’s parent company is determined to see British unicorns choosing to list in London, and its efforts appear to be paying off with the likes of Darktrace, the cybersecurity company, and the food delivery app Deliveroo both targeting UK listings next year.
Nevertheless, 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 2020 has been the deluge of so-called special purpose acquisition companies – SPACs – which have been used to take scores of tech companies public.
One City executive said the Treasury had made clear its determination to close that gap in a bid to demonstrate the innovation of London’s capital markets and their attractiveness as a destination for technology companies and green finance.
The choice of Lord Hill to spearhead the latest review is logical given his time as Europe’s commissioner for financial stability, financial services and capital markets union.
A separate review focused on fintech and headed by the respected businessman Ron Kalifa, a former executive at Worldpay, is expected to publish its recommendations in the coming months.
The Treasury declined to comment on Saturday.