Fast-growing companies, particularly technology companies, have been looking to the US public markets rather than those in the UK for equity financing. In fact, there have been no initial public offerings of European technology companies on the main market of the London Stock Exchange (LSE) since 2010. As a response to this, the LSE announced the creation of a new High Growth Segment (HGS).

The HGS is designed for mid-sized European companies that need a public platform and better access to financing in order to continue their growth. It is also anticipated that it will provide a transitional route for companies to the UK Listing Authority’s (UKLA) Official List.


The HGS sits outside the UKLA’s Official List and is, therefore, not subject to the Listing Rules. However, it does have the status of an EU Regulated Market and is subject to various EU financial services directives, including the Prospectus Directive, the Market Abuse Directive and the Transparency Directive. In addition, HGS companies will have to comply with the HGS rules and the LSE’s Admission & Disclosure Standards with respect to the provision of information.

Eligibility Criteria

At the point of admission to the HGS, the company must:

  • be actively engaged in trading good and/or services (companies engaged, for example, in mineral resources at an exploration stage are ineligible);
  • be incorporated in a state within the European Economic Area;
  • control the majority of its assets;
  • offer equity shares of UK or other European trading businesses;
  • be a revenue generating business with a compound annual growth rate (CAGR) of 20 percent over a three year period. This growth is based upon CAGR using a four year range of financial data;
  • have a minimum free float of 10 percent in public hands with a sufficient number of shareholders to ensure an orderly and liquid market;
  • have a free float value of at least £30 million (the majority of the £30 million must be raised at admission to the HGS);
  • have published a prospectus in relation to the securities to be admitted to the HGS that must have been approved by the Financial Conduct Authorty (FCA) or other European Economic Area (EEA) equivalent authority; and
  • provide a non-binding indication that it intends to apply for admission to the UKLA’s Official List.

In addition, a key adviser must be retained at admission to the HGS on an on-going basis for specific matters. Key advisers must: (i) be an FCA authorized person; (ii) have, inter alia, sufficient prior relevant experience and skill to satisfy the LSE that they are suitably competent to perform the role; and (iii) have in place adequate controls which will allow them to carry out their role in accordance with the rules of the HGS.

This can be seen as a response to the Jumpstart Our Business Startups Act, which introduced a similar regime in the United States. The LSE also hopes high-growth companies will be dissuaded from seeking a listing on NASDAQ where companies can already take advantage of a minimum 10 percent free float requirement. Ultimately, it is envisaged that the new HGS will fill a perceived gap between the Alternative Investment Market (AIM) and the LSE’s main market, and thereby make London a more competitive market globally.

Adam Parmenter and Russell van Praagh