The government has announced new proposals designed to make the UK a more attractive and competitive listing destination for high growth businesses.

Described as 'ambitious' and 'bold' the proposals include a planned new route to the UK IPO market.

An IPO (initial public offering) is the process by which a company obtains a first listing on an investment exchange and offers shares to the public for the first time.

The government has said that the new route to market will complement the UK's existing markets, including AIM and the Premium segment of the London Stock Exchange's (LSE) Main Market. The proposals are likely to include reformed rules on:

  • free float (currently, at least 25% of the shares of a company applying for a premium listing on the Main Market must be held by the public in one or more EEA states at the time of admission)
  • eligibility criteria
  • reporting requirements

The government intends to work alongside the LSE to develop the proposals.

Aimed at mid-sized, high-growth businesses - which the government feels are currently under-represented on the UK's public markets - the move is designed to create a 'launch pad' for companies seeking a full Premium Listing.

It is hoped that the expansion of the IPO market will enable businesses to have greater access to equity capital and will result in the creation of more jobs.

The Minister for Universities and Science, David Willets, said: "There is a rich crop of innovative European high-tech companies that will be going to the financial market over the next few years.

"We're determined to make sure that as many as possible should do an IPO and float in the UK, not elsewhere".

The announcement by the UK government follows a similar move in the US, where the JOBS Act has streamlined the regulatory burden for companies listing on the US public markets.

Earlier this year the Financial Services Authority began consultation on changes to the UK's Listing Rules and initiated a discussion on the wider issue of the quality of the UK's listing regime. It intends to present its proposals in October.

The consultation and the government's latest announcement send out a clear message that something more is needed to attract flotations to the UK.

Further details of the eligibility criteria and the benefits of the new route to market are expected to be published before the end of 2012.