Allowing companies to float as little as 10 percent of their shares in London would help more businesses grow, but should be seen as a step rather than the end result, an economic adviser to British Prime Minister David Cameron said on Wednesday. The government last month announced plans to make it easier for technology firms to list their shares in London in a bid to stem the flow of high-growth companies heading across the Atlantic to raise capital.
Along with easing reporting requirements, one of the proposals includes lowering the proportion of its shares a company has to sell when it joins the stock market, currently 25 percent for a main market listing. "It is a step on the way towards really building up substantial companies. We have to, in this country, start building up substantial companies as all too often we see them go across the water to the US," said David Young, a former government minister and now an adviser to Cameron.
Responding to concerns over liquidity - the ease with which investors are able to buy and sell shares - Young acknowledged that it would be impacted but said selling a 10 percent stake should not be seen as the end stage."You are doing no more than making a mark. You are not going to have a liquid market ... It is an early stage but it does put you on the map and show exactly what you are, to customers, to everybody. It is not the end of the road," he told a conference at the London Stock Exchange on Wednesday.
Marcus Stuttard, head of the LSE's junior Alternative Investment Market (AIM) said this new proposed route to market, as well as other measures it is lobbying the government for, such as the removal of stamp duty tax on trading AIM shares, would help open up the moribund IPO market to companies of all sizes again.
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