UK encourages tech IPOs

The UK Government wants to make it easier for private equity and venture capital firms to float their technology companies on the London Stock Exchange.

UK ministers will propose changes to relax the current listing rules on the London Stock Exchange (LSE) for high-growth technology companies on Thursday.

The proposals will lighten the burden by allowing these companies to list as little as 10 percent of their business, down from the current 25 percent obligation, and present fewer years of account data. It is also expected that the companies will have less rigorous board composition standards than is currently practiced.

The measures would need to be ratified by the Financial Services Authority before becoming law and they have proven contentious with institutional investors who argue that this may weaken corporate governance. 

The move further shows the UK government’s desire to bolster the technology centre. In chancellor George Osborne’s last budget speech he said it was his objective to make the UK “the technology centre of Europe”.

This is principally because the initial public offering market for technology companies in the UK has been losing ground to the US since 2010. 

Many European technology companies have been listing on NASDAQ rather than the LSE because of the Jumpstart Our Business Startups Act. One of the Acts provisions cuts the amount of freely-tradable shares a company requires.