New capital raising review to boost UK companies and markets

A new review to boost companies listed on UK stock markets by giving them more options when raising capital was launched by HM Treasury on 12 October 2021.

The UK Secondary Capital Raising Review (‘the Review’) will be chaired by senior Freshfields lawyer Mark Austin and will examine whether rule changes and better use of technology could make capital raising more efficient for companies already listed on UK markets. The launch of the Review is the latest step in the Government’s response to Lord Hill’s UK Listings Review, which was set up to make the UK an even more attractive destination for IPOs and optimise the capital raising process for large and small companies.

According to the press release:

The UK’s capital markets were a lifeline for many companies through the pandemic, with £30bn of new equity raised in 2020 to shore up businesses, protect jobs and seize opportunities to grow. However, most of these businesses chose to raise funds through private placings with a small group of institutions, which can be completed faster and at a lower cost but exclude existing shareholders and dilute their stakes in the company. The UK Listing Review found companies are deterred from using other mechanisms like rights issues, which preserve the interests of existing investors in the company, because they involve greater costs, time and uncertainty, and require the publication of a prospectus.

The expert group led by Mark Austin will review these regulatory barriers and open up the choices for listed companies seeking to raise capital, including by looking at the overall duration of the process, considering whether new technology can be used to speed up the information flow to shareholders and help them exercise their rights, and assessing other fundraising mechanisms that are used in international markets.

The Review’s work will be carried out in consultation with relevant stakeholders including the Government and the FCA, buy-side and sell-side firms, listed companies, and legal and academic experts. The Review launched with a Call for Evidence, which will run until 16 November, and will report to the Government in Spring 2022.

More details about the Review are available here.

Published 12 October, 2021

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