IPOs attract a lot of money for the companies going public, but the location of the offering can make a substantial difference in how much is raised and how the company is perceived. While some companies seek out the London Stock Exchange (LSE), more seek out U.S exchanges. But Britain hopes to change that, and to that end is considering mimicking key provisions of the U.S. Jumpstart Our Business Startups (JOBS) Act, including offering more lenient rules on IPOs.
Bloomberg reported Wednesday that while London requires a startup to offer a minimum of 25% of its equity at an IPO, it is considering wooing startups—particularly tech startups, which anticipate fast growth and usually want to sell a smaller stake at an offering—by cutting that requirement to only 10%. Still, that may not be enough to lure companies in search of ready cash to fuel expansion.
Rohan Silva, who advises Prime Minister David Cameron on technology, was quoted saying after a meeting last month with entrepreneurs and investors that “[t]he U.K is looking into adopting elements of the U.S. JOBS Act, relaxing rules including equity listings.”
Neil Rimer, co-founder of Index Ventures, the biggest venture capital fund in Europe, said in the report that the British government views more relaxed rules for IPOs “as part of the broader effort to create a fantastic ecosystem for startups. “You really can’t be a contender for those businesses unless they have the ability to access public markets.”