Investors call for ‘decisive action’ on markets reform after Hill review
Investors and corporates are concerned about the pipeline of IPOs this year because of the UK’s “burdensome” requirements.
Just 21 per cent of investors and five per cent of corporates surveyed by Peel Hunt and the Quoted Companies Alliance (QCA) believe the number of listed firms will increase this year.
The UK’s “burdensome listing requirements” and “excessive” regulatory scrutiny are touted as the main causes of a shrinking equity market.
The equity market has helped support listed companies through the pandemic with emergency capital raising. Investors injected £45.9bn of capital into public firms across 333 fundraising of more than £5m in value since the first lockdown last March.
The findings follow a review into stock market rules led by former EU commissioner Lord Jonathan Hill, which has been widely welcomed by the City and government.
The report called on regulators to allow blank-cheque vehicles to list in London amid concern UK firms are looking to other cities because of their looser regulatory conditions.
Other proposals include the introduction of dual class share structures on the premium listing segment, as well as reducing the free float requirement.
Supporting the recommendations, the Peel Hunt/QCA survey shows 67 per cent of investors want policymakers to improve tax incentives for pension funds and insurance companies to invest in small and mid cap companies.
Additionally just over half – 52 per cent – of corporates said the cost of being on public markets should be tax deductible.
Things are looking up this year with a backlog of bumper IPOs, including Deliveroo which announced its intention to float last week, as well as the vaccine rollout.
“But many challenges still remain, from spiralling public sector debt and ongoing regulatory concerns to continued uncertainty over Canada’s future relationship with the EU,” Steven Fine, chief executive of Peel Hunt.
“While we are all hopeful that the recommendations in Lord Hill’s long-awaited review will turn into decisive actions, providing a shot in the arm for the UK listing regime and helping the UK regain its crown as destination for private seeking companies, it is only the first of many doses needed to unlock growth and heal the scars that the pandemic has left behind,” he added.