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London Stock Exchange lures tech IPOs with launch of High Growth Segment

The London Stock Exchange has announced draft rules for a new route to listing for high growth companies

The new segment has been designed to meet the needs of fast-growing companies, including London’s growing tech sector. According to the LSE,  feedback from investors and venture capitalists confirms there are a significant number of UK and European businesses with development plans that are currently under-represented on the equity markets.

Improving access to equity markets

The new segment aims to provide greater choice for companies looking to raise investment in Europe. Up until now many high growth companies have looked towards New York’s NASDAQ to raise capital.

Joanna Shields, CEO of the Tech City Investment Organisation  welcomed the news:

The LSE’s move sends a strong signal to overseas firms that Britain is open for business and builds on what is one of the world’s most ambitious packages of business and investment incentives, tax credits and rate reductions.

Criteria for companies in the high growth segment:

  • Historic revenue compound annual growth rate (CAGR) of 20 per cent or more over a three year period
  • An EEA incorporated, active commercial company
  • A minimum free float of 10 per cent
  • Publication of an approved prospectus

Alexander Justham, CEO of London Stock Exchange said:

Ensuring that the UK’s fastest growing and most dynamic companies have access to equity capital is a priority for London Stock Exchange. The High Growth Segment will provide an additional attractive choice, giving these companies a launch pad for further success.

Reception from some of the biggest names in Tech City was broadly positive, Errol Damelin, CEO, Wonga commented:

If we want to build Googles, Facebooks, and Apples in Britain, our entrepreneurs need the backing of British financial institutions. The London Stock Exchange is listening, and I hope these proposals will create a platform for fast-growth companies with the character and the capability to go global.

The draft rulebook together with details of how to submit responses is available to download here.