A major review will investigate ways the UK can be made an “attractive destination” for Initial Public Offerings (IPOs) and “optimise” the capital raising process for small and large companies, it has been announced.
The UK Secondary Capital Raising Review – chaired by industry expert Mark Austin – forms part of Lord Hill’s UK Listings Review, published in November 2020.
The report reveals that the second step will analyse whether rule changes and smarter use of technology could make capital raising more efficient for firms already listed on UK markets, such as the FTSE 100.
According to the latest statistics, UK businesses raised some £30 billion of equity finance in 2020.
But Lord Hill’s UK Listings Review found that most of these firms chose to raise funds through private placings with a small group of institutions. This reduces the time and cost of fundraising but excludes existing shareholders and dilutes their stakes in the company.
The study also revealed that public companies are deterred from using mechanisms like rights issues because they involve “greater costs, time and uncertainty”.
Commenting on the review, Chancellor Rishi Sunak said: “Our plans to boost UK markets go beyond attracting the world’s most successful companies to list here. We want to make sure companies who already tap our world-leading capital markets can raise finance efficiently and include their current shareholders in the process. I am pleased that Mark has agreed to spearhead this effort and take forward this important recommendation from Lord Hill’s UK Listing Review.”
Mr Austin added: “Improving the efficiency of secondary capital raisings by listed companies is an important element of making the UK an even more attractive place for businesses to list. I am delighted to accept the Chancellor’s request for me to lead the Review. I am keen to receive views from a broad range of interested parties, which is why we are launching the Review with the Call for Evidence.”
The UK Secondary Capital Raising Review will be published in spring 2022.
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