A lot of the time retail investors are not able to participate in IPOs at the same time as institutional investors. Allowing this might potentially drive-up share prices and therefore boost UK valuations.
Also, creating a central research platform for retail investors, as suggested in the Kent Review, would leave investors better informed about and more willing to invest in domestic companies. This would be particularly helpful for smaller companies that don’t receive a lot of analyst coverage.
As well as encouraging UK retail investors to take a more active role in markets, there is also potential to make the general UK business environment more attractive, particularly to foreign firms.
While it may be tricky, politically speaking, reducing corporation tax would send out a signal that the UK is open for business.
Currently, the tax burden on smaller companies is relatively high. Reducing the headline rate, or cutting national insurance for smaller businesses would free up cash for investing in growth. So too would extending capital allowances.
The Treasury might also want to introduce tax reliefs aimed at making equity financing more attractive than debt financing.
Let’s not forget that London is still one of the world’s pre-eminent global financial centres. But clearly, we need to remain forward looking and progressive, in terms of regulation and taxation, if we want it to remain that way.
That’s why it’s important we look at ways to ensure the UK is as attractive as a listing destination as possible and that we ensure we have the capability to produce the mega-caps of tomorrow.
The good news is that there is plenty of good work underway. But with some targeted government and regulatory support, as outlined above, London will once again become a magnet for new IPOs. EQ has the skills, knowledge and experience to help them along every leg of that journey.
Over to you, Mr Chancellor.
Insights from Robin Walker - Director of Business Development at EQ