Lorna Tilbian Columnist Reshaping the rulebook T founders and shareholders contemplating an initial public he UK listings review was launched in November last year to strengthen the UKs position as a and facilitate the further development of the companies they leading global financial centre. After consultation, have built. Until we have a critical mass of businesses with companies, investors and markets eagerly await comparable attractive valuations, we need regulations that recommendations in 2021. actively draw them here. With Brexit and the pandemic, it will be critical that we seize We need an ecosystem and, potentially, new FTSE sectors to the opportunity to reshape our rulebook so that our listings attract entrepreneurs, bankers, analysts and investors. The media market is conducive to the needs of fast-growing new-economy sector was created after the recession in the early 1990s by merging companies, particularly tech companies, which will create the agencies with broadcasting and publishing, respectively plucked out growth and jobs of the future. of the leisure and paper, packaging and printing sectors. Britain must be as much at the forefront of the fourth The dozen FTSE media players this spawned by 2000, the industrial revolution as it was of the first, while cementing Londons reputation as a world-class market with high standards FTSE constituents had been but glimmers in the eye of visionary of governance, shareholder rights and transparency. founders in the mid- to late-1980s. Indeed, Sky, 39% founder Key areas seen to be making the UK less competitive include controlled, was bought by Comcast in free float requirements and dual class 2018 for $39bn, the highest ever exit share structures (DCSS). A minimum valuation for a UK media company. free float requirement of 25% versus Its spectacular success must surely, 10% in the US leads founders to view Britain must be as much at the largely, be because of the influence a UK listing as requiring the loss of forefront of the fourth industrial of the founder and his substantial more long-term value. The revolution as it was of the first skin in the game. unwillingness of UK shareholders to This debate is framed as high accept DCSS has been cited as a regulation versus cutting regulation major obstacle to attracting fast-growth businesses. There will be buy-side challenge to the dilution of shareholder Many founders want to retain control of their businesses while controls that must be recognised and reflected in any proposed they continue to develop them post-listing, but do not want the changes to the listing rules, but anything that deters companies perceived lower valuation and liquidity issues of missing out on will be a pyrrhic victory. a premium listing. A founder can be more motivated by the creation of long-term value in the face of short-term flexibility and celebrate our fastest growth companies, which opportunities, such as a proposed acquisition early in life by a represent jobs and the future of an independent Britain. Nasdaq foreign company, which could lead to the impoverishment of the must not remain the natural destination for aspirational UKs listed ecosystem, tech ecosystem, and HMRC. Not all DCSS are alike, and a balanced conversation about types and European exchanges as greater competition over time. limits would be welcome. Many UK founders would like a home listing, to be famous trade sale or private equity if we miss this opportunity. London here and give back, but feel pulled to the US by the friendlier has a natural time and language advantage we must now environment where tech founders are feted in Wall Street, create a regulatory advantage to capitalise on the pipeline and Main Street and the media and higher valuations. attract these companies before it is too late. Carpe diem! Indeed, valuation is the overarching challenge. For most 51 Impact ISSUE 33 2021_pp50-51_Lorna_Tilbian.indd 51 26/03/2021 10:14