Rishi Sunak has set out his ambition to make capital raising easier for public companies listed in London as a part of the government’s regulations overhaul post-Brexit.
The chancellor today launched the UK Secondary Capital Raising Review, which will look at ways of giving listed companies greater access to capital through secondary transactions in a bid to boost the City’s global competitiveness.
Secondary capital raising measures, done through selling new shares after a company has already gone public or through private placings, are done to quickly inject capital to finance capital investment.
The new review is the latest in a number of proposed changes to regulations post-Brexit that will aim to make London a more attractive destination for IPOs and improve conditions for companies already listed here.
The review will be headed up by Freshfields lawyer Mark Austin.
“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,” Sunak said.
“I am pleased that Mark has agreed to spearhead this effort and take forward this important recommendation from Lord Hill’s UK Listing Review.”
Last year, £30bn of equity was raised in secondary transactions, however the vast majority came through private placings involving a small number of institutional investors instead of through rights issues.
Private placings are far quicker and lower cost, however they exclude existing shareholders and also dilute their equity in the company.
Austin’s review will look at how to make rights issues quicker and cheaper for firms, including whether “new technology can be used to speed up the information flow to shareholders and help them exercise their rights”.
“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,” Austin said.
Two government reviews released this year have outlined a number of proposed changes to financial services regulations now that the UK is no longer tied to the EU’s rulebook.
Among the policy suggestions are changes to the share listings rules to attract more tech unicorns to go public in the UK, allowing blank-cheque Spacs to list in London and reducing capital requirements for insurance firms.
Sunak said earlier this year that Brexit would lead to a “big bang 2.0” in reference to the period of financial services deregulation in the 1980s.
Speaking at a fringe event at the Conservative party conference last week, Sunak said: “We have this unique opportunity now we haven’t had for decades to look at this stuff afresh and certainly in the bit I’m responsible for, financial services, I wrote in my speech in Mansion House some time ago that set out what I think is probably some of the most ambitious approaches to regulation in financial services we have seen in a long time.
“We are going on all of those things to deliver the reforms that the industry can now benefit from post-Brexit and make sure this remains the most competitive place in the world for financial services.”