![]() Allowing founders to retain control while listing would permit them to pursue longer-term objectives, he argues. Reddy argues, however, that much of the 'misbehaviour' of tech companies stems from a short-term focus on profitability that reflects the influence of public investors. Safeguards to maintain high corporate governance standards will be essential." "The London Stock Exchange has a reputation for good governance and it's important not to let that slide in the pursuit of wealth. "It's important not to throw the baby out with the bathwater," says Wilson. So there's a real incentive for the sponsor to close any acquisition, whatever it may be." Too little, too late?Īt a time when policymakers are considering how to contain the social harms of Big Tech, some might question the wisdom of relaxing rules to give founders more influence in their companies. "If it does make an acquisition, the sponsor gets 20% of the equity. "If a SPAC hasn't found a company to acquire within two years, the SPAC liquidates the sponsor gets nothing," he explains. In the US, Reddy also argues, SPACs have not led to increased investment in high-quality start-ups. "It doesn't have to relist on the London Stock Exchange you can relist in New York or on NASDAQ." "There is no reason why a SPAC should stay on the London Stock Exchange once it's acquired a company," he explains. Not only do the new UK rules endanger retail investors in Reddy's view, they may not result in more tech companies listed on the LSE, he says. Meanwhile, the UK has changed its rules on SPACs – shell companies that raise money in an IPO before making an acquisition, typically of a tech start-up – to be more in line with the US. He argues that remaining rules that deem any share ownership over 5% as being outside 'public ownership' discourage start-ups with VC investments, typically made in exchange for more than 5% of equity, from listing. This will allow more tech companies to undergo direct listings without diluting the founder's ownership but again does not go far enough, Reddy believes. The FCA has also lowered the minimum amount of equity a company must release to be included in the premium list, from 25% of shares in public ownership down to 10%. "So you're either going to go to the US or you'll say, 'I'm going to make sure this company is a bit more mature before I go into the premium tier'." "Five years isn't a lot of time," Reddy says. The new FCA rules allow founders to own a 'golden share' that allows them to block takeovers, but this still means investors could oust them. Reddy believes this change is "a step in the right direction but not ambitious enough to really move the needle". Only premium list companies are included in share indices such as the FTSE 500, gaining access to a broader market of investors. In December, the Financial Conduct Authority updated these rules so that companies with dual-class share structures – which allow founders to retain control over their companies after IPO – can be included on the LSE's premium list. The UK has sought to address this perception by relaxing some of its listing rules. "The UK has been perceived to be very strict relative to the US, which has traditionally been more flexible." ![]() One reason is its rules for listing, which in London have historically sought to limit the influence of individual executives, a deterrent for tech companies that are often founder-led. The LSE has historically been less attractive for tech founders looking to float than its US counterparts, says Wilson. ![]() When you see the government on television talking about the latest listing, people start to realise that tech companies are all around us, and young people think, 'I might go into a career in '." Making London more attractive for tech IPOs "I'm not suggesting Klarna listing in London would in itself completely alter the career or educational choices of the next generation of young people, but it helps to build momentum. "There is a lack of interest on the part of many young people in going into careers in tech, and a lack of encouragement to do so," Wilson says. Boosting the number of tech IPOs in the UK could also help ease the country's technology skills gap, says Tania Wilson, research director at analyst company TechMarketView, by making opportunities in tech more visible. ![]()
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