EU set to overhaul listing rules as competition for tech IPOs intensifies
The European Union is looking to overhaul and standardise listing rules in a bid to tempt more tech firms into floating in the bloc.
The EU listing Act, set to be put forward by Brussels lawmakers this year, will propose allowing founders to retain more control of their companies while enjoying the benefits of the public markets via dual-class share structures, according to the EU’s new digital innovation strategy, first reported by Bloomberg News.
Changes to the listing rules in the EU follow similar measures introduced in the UK last year designed to boost the appeal of London as a hub for tech IPOs.
Ministers and London Stock Exchange bosses are now eyeing up a swathe of further measures as recommended by Lord Jonathan Hill last year in a major review of London’s listing regime.
Founder of Tech London Advocates Russ Shaw said the move by Brussels showed competition to lure in tech IPOs between the EU and UK was heating up.
“This news today shows that the EU is clearly trying to up its game – and the UK markets need to keep pace,” he told City A.M.
“Implementation of the recommendations from the Lord Hill Review are key here – there has been progress, but given it is well over a year since the terms of the review were proposed there’s no time to waste.”
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, similarly told City A.M. that calls would now grow for ministers to push through the changes recommended in the Hill review to fend off the allure of EU listings.
“The pressure to bring these new changes in is likely to intensify as it’s become an uphill struggle to entice firms to list,” she said. “Timing is everything for an IPO and given the current market turmoil it’s no surprise companies appear to be cancelling new listings left right and centre.”
The EU currently also lags the US and China on the quantity of so-called ‘deeptech’ firms, which it hopes to remedy by attracting 45bn euros in private capital to fund a wave of innovation. The European Commission reportedly chalked up the current lack of deeptech to the “fragmented and risk-averse nature” of venture capital markets in Europe and a dearth of equity funding,
The EU’s digital innovation strategy, first reported by Bloomberg, also includes a proposal to countries across the EU match their regulation regarding dual-class share structures.
Regulatory sandboxes have also been proposed to allow startups to be more flexible with regulations and test products in a controlled environment.