Amid calls made at the Guernsey Funds Forum for reform to make stock market listings more appealing to growth companies, James Falla hears from Fiona Le Poidevin, CEO of The International Stock Exchange Group, about a Guernsey solution in the final part of our Funds Forum series of blogs
Calls for a review of corporate governance and ways to enhance shareholder value have been welcomed by Guernsey-headquartered The International Stock Exchange.
Jonathan Ford, City Editor at the Financial Times, who was keynote speaker at the Guernsey Funds Forum, made comments on governance, particularly in relation to utilities and growth companies.
“There is a perceived disconnect between providing services and incentives. Privatisation was supposed to transfer risk to private owners, instead it has transferred to customers who can’t mitigate it, with a use of complex structures and failure of regulators to hold companies to account.”
He said that the collapse of some major listed companies had demonstrated that financial engineering “can drive a substantial business to disaster” at a time when shareholder value was generally declining.
“Growth companies are increasingly avoiding listing,” he said. “We need to think imaginatively on how to reform and make the stock market more appealing to growth companies.”
Speaking after the Guernsey Finance-organised event, Fiona Le Poidevin, CEO of The International Stock Exchange Group, said that the wider marketplace was showing that UK SMEs were staying private further into the development cycle than in the past, principally because of disproportionately onerous governance and cost burden associated with going public through listing in the UK.
She said that listing had a number of benefits for companies, including capital raising, a clearly defined price valuation, an enhanced profile and a route to exit, all based on a demonstrable adherence to recognised standards of transparency and governance.
“However I do not feel that transparency and good governance can only be achieved by imposing process and cost which are excessive and discourage growth companies from listing,” she said.
“This is exactly why at TISE we are building an offering which combines the advantages of a fully regulated and well recognised listing venue with a regime which is more proportionate for growth companies in terms of process and cost.”
Trading companies, with Raven Russia, PraxisIFM, Ravenscroft, and the exchange’s parent company TISEG to the fore, have started to list on TISE.
“These examples demonstrate that the administrative and cost burden of listing on TISE is not prohibitive for growing companies. It is this offering which we are now taking out to the UK market, including London and the cities of the Northern Powerhouse and the Midlands Engine.”
“It is a proposition that we think is even more attractive in light of Brexit. The UK Government is looking for SMEs to be the engine room of economic growth for the domestic economy through Brexit. In order to achieve this, SMEs are going to need support to help facilitate their development, including access to finance.”
"The administrative and cost burden of listing on TISE is not prohibitive for growing companies. It is this offering which we are now taking out to the UK market, including London and the cities of the Northern Powerhouse and the Midlands Engine.”
Mrs Le Poidevin said that SMEs had been hit by squeezed bank lending, and were facing an uncertain future with Brexit on the horizon and limited alternative financing options. Owners were also worried about loss of control afforded by private equity investment, and concerned that a listing on a traditional UK exchange can be prohibitively bureaucratic and expensive.
TISE promotes itself as a solution, being in the European time zone but outside the EU, offering convenience, certainty, proportionality and a lower cost solution for UK growth companies to access finance from the capital markets.