If anybody needed proof that New York is far from a panacea for British firms looking to list on the public markets, second-hand car firm Cazoo serves as the obvious example.
Founded by serial entrepreneur Alex Chesterman, the firm’s valuation shot through the roof and it listed in New York at the apex of the SpAc craze. A few short years later, and the firm is being forced to dilute existing shareholders to the point of the irrelevant, with a $200m funding deal agreed yesterday to transfer over more than 90 per cent of the company to investment funds.
Shareholders will be less than thrilled – not least those who received their shares in Cazoo back in 2021 as part of the DMGT delisting, perhaps at that point thinking they were onto a good thing – but it appears that Cazoo will live to fight another day.
But if there is a lesson, it’s that the grass is not always greener on the other side of the pond. Comparing London to New York isn’t always helpful.
But Cazoo’s troubles shouldn’t blind us to the need to get cracking with long-discussed reforms to London’s listed markets.
There is broad consensus on some of the main issues: changes to the analyst and research ecosystem, a simpler listing structure, removing the regulatory directions that push pension funds into fixed-income markets like bonds rather than public and private capital markets. We have received endless, worthwhile reports, but it’s time for a little less conversation and a little more action.
There is a light at the end of the tunnel; our interview with the bosses of Cavendish today suggests that the IPO market may be opening up again, albeit slightly. But without reform, that light at the end of the tunnel may turn out to be a train. Let’s get moving.