London Stock Exchange - High Growth Segment – positioning for success

Posted by Martin Kay on
The London Stock Exchange (LSE) announced last week proposals to launch a new segment, the High Growth Segment, to the Main Market in March 2013 aimed at high growth, UK and European businesses:
  • Positioning the UK as the market of choice for high-growth companies on track for Premium listing
  • Aligned with government fiscal and social policy to ensure that the UK remains the best place in the world to start and grow a business with attractive tax breaks for investors and globally competitive corporation tax rates.

Eligibility

To be eligible for the High Growth Segment the company: § must be a trading company incorporated in the EEA;

  • Typically with a value of between £300m - £600m. Although the formal requirement will be that the value of shares in the public hands must be at least £30 million, which means that smaller companies may be eligible if a higher % of shares are in the public hands;
  • Which can demonstrate fast annual revenue growth rate of over 20% over the last 3 financial years; and
  • After admission a minimum of 10% the company's shares will be held in public hands. Although open to all "trading businesses" it will undoubtedly be focussed towards companies in the tech sector where dynamic revenue growth can be achieved over a short time-frame.

High Growth Segment v Official List v AIM

The High Growth Segment will provide a stepping stone to premium listing, filling the gap between AIM and Official List and the company will be required to confirm its intention to apply for admission to the Official List in the future:

  AIMHigh Growth SegmentOfficial List
Jurisdiction no restrictions must be incorporated in the EEA  no restrictions
Financial records no trading record requirement revenue growth rate of at least 20% for last three financial years three years financial accounts
% of shares in public hands (free float) no minimum 10% 25%
Value of shares in public hands no minimum £30 million no minimum but market capitalisation must be at least £700,000
Prospectus required AIM Admission Doc yes yes
Do listing rules apply? no no yes
Do admission and disclosure standards apply? no yes yes
Is it an EU regulated market? no yes yes

Summary

Encouraging business growth remains central to government policy. The success of the High Growth Segment will be measured by its ability to attract entrepreneurs that might otherwise look to Nasdaq, positioning the UK as a market of choice for the fast-growth tech sector.

About the Author

Martin heads the Corporate team in London and advises corporate clients and not-for-profit and public bodies, including universities, on a range of corporate and commercial issues.

Martin Kay
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