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London Stock Exchange Proposes Special Listing for Private Companies

The

London Stock Exchange

LSEG 0.03%

The group is trying to blur the line between public and private companies as part of a plan to list a fast-growing technology company in the UK in the wake of Brexit.

According to LSE regulators, the Financial Behavior Oversight Organization, and someone familiar with issues and proposals to the UK, LSE is a special market for private companies to publicly trade stock on the exchange on certain days. Proposed to be founded. The Treasury as seen by The Wall Street Journal.

Private company stocks are publicly traded every six months, once a month or quarter, for one to five days in each trading period. These companies are not subject to the same degree of regulatory oversight as fully listed companies. The requirement that the founders of start-ups say is the deterrence of listed stocks.

“The new venue type will serve as a stepping stone between the private market and the fully open market,” LSE said in a document sent to the FCA and the Treasury on December 21. It is available to companies seeking to raise capital without imposing growth-blocking regulations. “

The founders of startups, their employees, and early investors can raise cash by selling shares to individual and institutional investors. Large private companies will also have access to the public market under the proposal. LSE said in a proposal that tech companies such as banking app Revolut could later buy a huge amount of Klarna and remittance startup Wise could use this route to raise money for shareholders. rice field.

“There may be additional routes to the market to support a wide range of companies throughout the funding life cycle, such as helping to move from the private market to the public market,” said an LSE spokesperson. ..

This program requires regulatory approval and legal amendments.

A spokesperson for FCA and HM Treasury declined to comment.

The proposal came from Britain’s attempt to rebuild its financial markets after leaving the European Union in 2021. In November, the UK government told FCA, the premier financial policing organization: Promote competitiveness in the financial sector In addition to maintaining financial stability and consumer protection.

London, along with tech companies, has struggled to attract young, fast-growing companies. Usually choose to go public in the US Or Asia. The recent boom in special purpose acquisition companies (SPACs) has occurred primarily in the United States. The UK revised its IPO rules last year. Make London more attractive For high-tech companies and SPACs.

LSE has withstood a long-term decline in the number of companies listed on the exchange, dropping from 2,365 five years ago to 1,989 in 2020. Last year, a gradual reversal was seen, and the number of listed companies rose to 2,017.

The LSE proposal allows companies to trade private stocks between public trading windows. According to the proposal, the company can also share inside information with key stakeholders during the period without making it public.

The LSE must submit a “cleansing statement” that discloses important information prior to the open transaction window. This is intended to level the playing field.

LSE named this idea “MTF-lite” based on the industry terminology of financial markets known as multilateral trading facilities. If this goes on, it will be the first exchange for this type of hybrid model, where private companies regularly access public investors.

There is Existing Market for Private Equity In the United States

Nasdaq Ltd

Forge Global Inc. And Equity Zen Inc. Number of competing startups such as.

However, these exchanges are not accessible to most retail investors. Current regulations by the U.S. Securities and Exchange Commission are limited to accredited investors, that is, those who meet certain asset criteria, such as net worth over $ 1 million excluding home and annual income over $ 200,000. ..

In the United States, the SEC is working on a plan to force more Financial and operational disclosure The Wall Street Journal reported the percentage of private companies due to concerns about lack of oversight in the fast-growing segment of the market.

Write in Anna Hiltenstein anna.hirtenstein@wsj.com

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London Stock Exchange Proposes Special Listing for Private Companies

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