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The government urge to revive the City of London with a new share trading system in private companies was rejected by the heads of risk capital and private capital as unnecessary and compared to the “new version” of the British sick junior market.
Private occasional securities and capital exchange system (fish) – proposed by the previous conservative government and supported by Chancellor Labor Rachel Reeves – would allow investors in private companies to sell stakes on regulated stock exchanges.
The London Stock Exchange group is one of the companies planning to manage the fish trading site, where stocks It could be traded with a limited number of days each year.
However, investors questioned how much demand for the system, adding that the heads of fast -growing companies would be reluctant to abolish because they would risk losing control over the one who owns a share in their business.
“I just don’t see who will use it,” said a partner in a company with top -notch risky capital. “It’s a brave solution to a problem that is far more complex than the protagonists are willing to understand.”
Hussein Kanji, who founded Hoxton Ventures, said, “What problem is he solving?” The new system would be problematic to support risky capital because trading sections on private stock exchanges would assign the price mentioned to their portfolio companies that “would probably be low and perhaps unstable,” he added.
The treasury announced that the fish would provide fast -growing companies with an incentive to base themselves in the UK and act as a “indirect step” to eventually include in London’s public market.
The London Stock Exchange has suffered the outflows of investment and evaluation of the company, with high groups like Chip Designer Arm Holdings Plutale abroad and public companies like Flutter’s bookmaker, moving their primary lists to New York.
Sales of secondary stake in companies not listed have become prevailing as companies wait longer On the list, leaving investors to find other ways of bringing in.
In the United States, the private Nasdaq market has allowed investors and employees to trade the companies from 2013, while platforms such as Crowdcube, Seeddrs and JP Jenkins allow shares trading in the UK.
But multiple investors of risky capital and private capital – for which the Government said that the fish would be “interest” – they told the Financial Times that it was unlikely to use a platform for shares in their own portfolio companies or did not think to attract high quality companies .
The main executives of top, fast-growing start-up “want to control” who owns their shares, especially to avoid people who throw out supplies of the first day of any public inclusion, the risk capital partner added.
A person in a top international private capital company added that it would be “difficult to manage” by working with shareholders they did not know.
The financial behavior body has proposed to enable the companies “very limited” extent to set up limits to the types of investors that can buy their stakes, including in some situations that specify the list of “certain individuals”. He suggested to allow companies to limit the price range within which their shares could trade.
The International Stock Exchange, based in Guernsey, already has a service for a auction company for their own shares without brokers. CEES VERMAAS, the Tisea CEO, said he would suspect that the fish would be successful on the basis of his experience.
“We are skeptical that the rules are [for Pisces] Go far enough to succeed, because the companies will continue to have demands for discovering, “he said, adding that” he will have a lot of full intake costs. ”
“Fish are not much more than a new version of AIM,” Vermaas said, referring to the London junior stock market, which suffered from the fall of enrollment and small liquidity, despite the less strict rules than the London Stock Exchange’s main market.
FCA said that the fish “would open the door to more investors’ doors and can transform that private companies approach investors and growing”, while the treasury said that the proposal was “only one part.. The rules of including and creating a pension “megafund”.
Charles Hayes, a global rival of a private capital at the Freshfields law firm, said “for everyone [buyout executive] Whoever tells you, “I don’t want to deal with thousands of investors,” the direction of travel is clear according to increasing the routes to liquidity and. . A wider approach to private capital ”.
