Here are eight words that could prove transformative for the UK tech sector:
The private intermittent securities and capital exchange system.
It’s a bit of a mouthful. But this system – PISCES for short — could make it much easier for fast-growing firms to find investors. Legislation is set to appear in May with a full launch as soon as July.
The idea, as the boss of the London Stock Exchange Group put it this week, is that private companies “get to be public for a day.” They can raise funds using the same mechanisms available to listed companies without all the regulatory strictures that come with being a plc.
For a lot of firms, that could be an attractive proposition. I can think of a dozen British tech unicorns who have publicly flirted with joining the stock market, none of whom have put pen to paper. Economic uncertainty and poor liquidity on the LSE have been major inhibitors.
But if you’re only doing a daytrip to Paternoster Square, you don’t have to think too hard about how you’ll be doing in weeks, months or years from now: the uncertainty falls away. That should make PISCES a helpful bridge to a full stock market listing, particularly for companies who would sooner move to New York than float in London.
The flipside of the argument is that if PISCES is so attractive, will it stop tech firms ever moving to IPO? Could it even prompt listed ones to delisted in favour of using this new exchange?
It’s not impossible. But as VCs – particularly in deep tech — often point out to me, many tech firms are not suitable to be a plc. Not in London, not anywhere. They may be too small, or they may occupy such a discrete niche, no market analyst would know what to make of them.
Which makes PISCES a brilliant end-goal for companies who were never destined for the stock market – and a way for early-stage investors to exit and redeploy funds. As well as letting staff with share schemes realise some of the value of their work.
It does not mean ordinary, simple-minded folk like me can invest in Revolut or Monzo. Under current plans, only institutional investors will be able to access these capital raises, while retail punters are left on the sidelines.
That could be a source of frustration for some – but it does mean the UK’s financial regulator, the FCA, does not have to bother with a “market abuse regime”, a complex set of rules designed to stop firms duping less savvy investors with shaky profit forecasts.
Like other initiatives to rejuvenate the stock market over the years, it is possible PISCES could be a damp squib – a flopping fish out of water. For his part, LSEG chief David Schwimmer (no not the Friends guy) has boasted that the scheme has already attracted “global interest” from Europe, Asia and yes, even America. That is an encouraging sign, but I’ll believe it when I see it.
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