Post-Brexit market: Sunak mulls UK public listings overhaul to lure tech giants

Summary

• The "free float" requirement for a premium main market listing could be reduced
• Businesses might be allowed to hold dual class share structures
• Tech giants have delivered handsome returns since inception in the past

The tech sector has been comparatively immune to the economic crisis induced by the coronavirus pandemic. Moreover, it has helped in transforming traditional businesses in the digital age. Sources said Chancellor of the Exchequer Rishi Sunak is expected to bring about fresh reforms to the nation’s listing regime in order to lure tech unicorns to the London Stock Market.

Most of the leading tech companies are finding it attractive to list their securities in the US stock markets. However, in a post-Brexit scenario, Sunak would want to transform the London Stock Market into an attractive investment destination. Unicorns are usually referred to as budding businesses which have a valuation of nearly US$ 100 billion.

The reforms might include a tax holiday or relaxation in the minimum "free float" requirement for a premium main market listing to encourage bigger companies to retain greater ownership in their businesses as they go public.

In addition, companies might be allowed to hold dual class share structures. Alternatively, attracting more tech giants to London could ensure job creation here and get enough workforce post Brexit.

In the present times, encouraging start-ups could not only boost innovation but also aid in economic recovery.

The tech sector has been doing well as a lot of jobs were posted in this domain despite the economic fallout. 

Also read: UK Witnesses Spike in IT Job Advertisements with The Ease in Lockdown

Let us put our lens through some tech companies listed on the London Stock Exchange and learn about their business stock performance.

Just Eat Takeaway.com NV (LON: JET)

• FTSE 100 listed technology company Just Eat acts as a bridge between a group of restaurants and food chains that connects to the consumer. Just Eat allows customers to order and pay for food through an online platform.
• Just Eat shares were listed on LSE for trading on 3 February. Since then, Just Eat shares have returned a price return of approximately 35 per cent. This means that an investment of £10,000 at the time of admission could have returned £13,523 by now.
• Despite the challenging environment, the company managed to generate strong adjusted EBITDA and seemed to be well positioned for the near-term.
• As per the recent trading update, the company witnessed a growth of 46 per cent in its order book during Q3.
• On 9 November at GMT 8:57 AM +1, JET shares traded at GBX 9,266. The market capitalisation of Just Eat while writing was hovering around £13,707.43 million.

Also read: Rise in UK Tech Exports: Will the Rally in Tech Stocks continue?

Aveva Group Plc (LON: AVV)

• Cambridge-headquartered engineering & industrial software company Aveva Group helps companies with sustainable development solutions through process optimisation. The multinational information technology company also provides enterprise resource management solutions.
• FTSE 100 listed Aveva Group shares got admission for trading on LSE on 5 December 1996. Since then, Aveva Group shares have returned a price return of approximately 4,675 per cent. This means that an investment of £10,000 at the time of admission in Aveva Group could have turned to £4,77,503.
• Aveva has performed creditably during the first half of 2020, despite a relatively tough trading environment due to pandemic disruption.
• Aveva's software helps its industrial clients to digitalise as the trend towards online shopping has gained more pace in recent times. Aveva’s dividend per share stood at 15.5 pence per share during the first-half of 2020, in line with the same period last year.
• On 9 November at GMT 10:15 AM +1, AVV shares were trading at GBX 4,184. The market capitalisation of Aveva Group while writing was hovering around £6,553.92 million.

Ocado Group Plc (LON: OCDO)

• FTSE 100 listed Ocado Group company operates as an online supermarket through Ocado.com and is one of the fastest growing companies across the UK. In addition, the company also facilitates online software platforms for other retailers in the sector.
• The company recorded strong performance during Q1 2020 as it witnesses higher demand in online grocery orders. The group also upgraded its full year EBITDA and now anticipates it to be in excess of £60 million. Now during the second lockdown, the company might witness strong growth in its average order size.
• Ocado Group shares got admission to trading on LSE on 26 July 2010. Since then, Ocado Group shares have returned approximately 1,445 per cent. This means that an investment of £10,000 at the time of admission in Ocado Group could have turned to £1,54,491.
• On 9 November at GMT 10:37 AM+1, OCDO shares traded at GBX 2,603. The market capitalisation of Ocado Group while writing was hovering around £19,302.15 million.

Sage Group Plc (LON: SGE)

• FTSE 100 listed Sage Group Plc provides business and accounting software to its clients and has a strong presence across the EMEA (Europe, Middle East, and Africa) region. Sage Group recorded solid growth during the first nine months and expects a growth rate of 7-8 per cent in its recurring revenue for this fiscal year. The company had outperformed the benchmark index in the last six-month period.
• Sage Group shares got admission to trading on LSE on 10 June 2013. Since then, Sage Group shares have returned a price return of approximately 95 per cent. This means that an investment of £10,000 at the time of admission in Sage Group could have turned to £19,512.
• On 9 November at GMT 11:17 AM+1, Sage shares traded at GBX 670.20. The market capitalisation of Sage Group while writing was hovering around £ 7,255.39 million.