London Stock Exchange eyes world-first private stock exchange launch by next year
The London Stock Exchange has said it could launch a world-first stock market for private companies as soon as next year as it looks to revive the fortunes of the Square Mile and stop a flood of firms leaving for New York.
Chief of the bourse Julia Hoggett, who also heads the Capital Markets Industry Taskforce, told reporters yesterday the new exchange would look to give private firms a place to auction shares akin to a public market, while remaining in private ownership.
The exchange, currently called the “intermittent trading venue”, comes as top City figures search for ways to boost the Square Mile amid a sharp decline in IPOs and a flurry of firms ditching their listings for New York.
Hoggett said the London Stock Exchange was currently running an internal competition to name the exchange, temporarily dubbed ‘ITV’, and was hoping to open the market in 2024.
She added that she already had “incoming calls from all over the world asking if they could use [the new private exchange]”.
“The reality is that we are seeing interest from companies who want to have the ability to generate liquidity events but who are not ready to go public,” she told reporters.
The new bourse has also seen interest from a range of private equity and venture capital firms and institutional investors, Hoggett said.
“It does feel like a mechanism for connecting these two ecosystems together and not putting private companies into a position where they are forced – possibly by their shareholders – into a trade sale with another institution when they would like to continue to grow,” she added.
Hoggett said the financial services and markets bill making its way through parliament would be crucial to the delivery of the exchange by giving regulators greater powers to run trials with firms.
The exchange would look to solve a growth capital gap for companies who may currently be forced to sell themselves to bigger firms, while also allowing early stage investors and equity-holding staff to cash in their stakes.
The market comes amid a push from the Capital Markets Industry Taskforce to boost the appeal of London for firms, after a plunge in the amount of listings this year.
Cash raised via IPOs in the capital plummeted some 80 per cent in the first quarter compared to last year, and was down 99 per cent on the record levels experienced in the first quarter of 2021.