London stock market mulls private exchange as IPOs flounder

Private exchange Image credit: PeskyMonkey via Shutterstock

The London Stock Exchange could next year launch a new stock market for private companies as it explores ways to encourage liquidity in UK markets.

The LSE’s chief executive said yesterday that the private exchange, currently called Intermittent Trading Venue, would allow companies to auction off shares whilst remaining in private ownership.

Julia Hoggett, CEO of the London Stock Exchange, said she was hoping to open the market in 2024.

“The reality is that we are seeing interest from companies who want to have the ability to generate liquidity events but who are not ready to go public,” Hoggett told reporters.

“It does feel like a mechanism for connecting these two ecosystems [investors and companies] together and not putting private companies into a position where they are forced – possibly by their shareholders – into a trade sale with another institution when they would like to continue to grow,” she added.

The plan comes as the London Stock Exchange struggles to drum up activity in the UK public markets.

Despite encouraging IPO activity from the tech sector in 2021, the global economic slowdown has hit the UK markets hard.

London is increasingly seen as a weaker option for public launches compared with New York, which has poached notable UK-based tech firms preparing for IPOs, including Cambridge semiconductor giant Arm.

The private exchange would look to give an option to firms hoping to boost investment without having to IPO, which is seen as a risky move by many right now within the UK tech industry.

Stimulating growth in the UK markets and startup space is seen as a major priority for the government and opposition parties.

The UK’s financial regulator has been exploring ways to reform public market rules to encourage more listings.

Shadow chancellor and Labour MP Rachel Reeves said yesterday that if elected, her party could put pension fund capital towards a £50bn “future growth fund” that would support British startups.

Reeves said her goal was to empower domestic funds to back British startups to encourage them to scale and eventually list in the UK.

Read more: Will London tech IPOs recover in 2023?