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Government Launches Review of Capital Raising Rules in Stock Market Shakeup -- Financial News

10/12/2021 | 08:33am EST

By James Booth

Of Financial News

The government has launched a review of the U.K.'s capital raising rules to help make the U.K. a more attractive destination for listings.

The U.K. secondary capital raising review will examine whether rule changes and better use of technology could make capital raising more efficient for companies already listed on U.K. markets.

The review comes in response to Lord Hill's U.K. listings review, which was published in March and aimed to make the U.K. a more attractive destination for IPOs and to improve capital raising for large and small companies

Chancellor Rishi Sunak has appointed Freshfields partner Mark Austin to lead the latest review.

"Our plans to boost U.K. markets go beyond attracting the world's most successful companies to list here," Mr. Sunak said.

"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."

"I am pleased that Mark has agreed to spearhead this effort and take forward this important recommendation from Lord Hill's U.K. listing review," he added.

"The brief is to be reform minded and to look at it with fresh eyes," Mr. Austin told Financial News.

He said the review would examine lessons from pandemic capital raisings, recent tech advances, practices in other jurisdictions, and how to get retail investors more involved during secondary raisings.

"There is a big accent on trying to make the market more accessible," he added.

Companies raised 30 billion pounds ($40.78 billion) of new equity on U.K. capital markets in 2020 as they looked to shore up their balance sheets in the face of the Covid-19 pandemic.

Most of these businesses chose to raise funds through private placings with small groups of institutions, which can be completed quickly and at a low cost, but exclude existing shareholders and dilute their stakes in the company.

The Hill review found companies were deterred from using mechanisms like rights issues to raise cash because they involve greater costs, time and uncertainty, and require the publication of a prospectus.

The expert group chaired by Mr. Austin will review these regulatory barriers with the goal of increasing choices for listed companies seeking to raise capital.

It will look at the duration of the process, whether technology can be used to communicate better with shareholders and also examine fundraising mechanisms used in other international markets.

"Improving the efficiency of secondary capital raisings by listed companies is an important element of making the U.K. an even more attractive place for businesses to list," Mr. Austin said.

"I am keen to receive views from a broad range of interested parties, which is why we are launching the review with the call for evidence," he added.

The call for evidence will run until Nov. 9 with a final report expected in spring 2022.

Mr. Austin told FN the review was "a once-in-a-generation chance to look at this whole area and see if we can improve it for the better."

Website: www.fnlondon.com

(END) Dow Jones Newswires

10-12-21 0833ET

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