Measures could include lowering minimum free float to 10 percent from 25 percent, Financial Times and Bloomberg report
The UK government is considering measures to allow technology companies to float as little as 10 percent of their company in initial public offerings as a way to encourage tech IPOs in the UK and compete with the thriving US market, according to press reports.
The government would lower to 10 percent from the current 25 percent level the minimum stake a technology company must offer in an IPO, according to a report by the Financial Times.
The newspaper didn’t say where it got the information but reports that ‘senior figures in the government have given their backing to the proposals’.
Some measures reportedly under consideration by the UK government would follow the US Jumpstart Our Business Startups (JOBS) Act, which lowered minimum free float requirements for tech firms and exempts companies with as many as 2,000 investors, excluding employee shareholders, from having to file to the SEC, from the previous limit of 500.
Bloomberg has also reported that the UK government is considering relaxing some IPO rules for technology companies to capture a European tech IPO market that could measure some $15 bn when the region’s top 30 or so tech companies that are likely ready for IPOs are included.
‘The UK is looking into adopting elements of the US JOBS Act, relaxing rules including equity listings,’ Bloomberg cites Rohan Silva, a technology adviser to UK Prime Minister David Cameron, as saying after a July meeting the prime minister held with investors and entrepreneurs.
In the US, technology IPOs have accounted for a third of all IPOs this year, according to Renaissance Capital, which specializes in IPO research.
Tech IPOs so far in 2012 have raised a total of $19.1 bn in 30 deals, including the high-profile Facebook IPO in May.
Second in terms of both total proceeds and number of deals was the financial sector, with 14 deals and $3.1 bn raised.
The JOBS Act in the US, however, has come under criticism as contributing to a growing lack of clarity by encouraging companies to avoid filing publicly.
SEC commissioner Luis Aguilar has said the JOBS Act ‘would seriously hurt investors by reducing transparency and investor protection and, in turn, make securities law enforcement more difficult’.
Other groups have raised concerns that lowering the minimum free float to 10 percent could further reduce protections for shareholders and increase trading volatility by reducing the number of shares available for trade.