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Britain to promote share ownership in bid to encourage London IPOs
Global Banking & Finance Review®
Company
By Huw Jones
LONDON (Reuters) – Britain plans further measures to encourage people to buy shares in an effort to boost economic growth and help convince companies to list in London rather than the United States.
The Conservative government has come under pressure from Britain’s financial sector to ease rules as the City of London faces stiff competition for initial public offerings from New York and European Union financial centres since Brexit.
Bim Afolami, who was appointed financial services minister earlier this month, said on Tuesday his priority was to deliver on reforms already outlined by the government, ensure regulators meet their competitiveness objectives, and promote “ownership”.
Last week, Britain said it would explore offering shares to the public to help offload its 39% stake in NatWest bank.
“We are going to do more in the budget in the spring, to focus on promoting ownership,” Afolami told a Financial Times banking conference, adding: “I am very passionate about this, particularly for younger people”.
Britain is expected to hold a general election next year, with the opposition Labour Party tipped to win in opinion polls. It has not yet laid out its plans should it be elected, but backs encouraging more private investment to lift growth.
Afolami did not give a timetable for any changes and acknowledged that the reforms to encourage ownership and persuade pensions to invest in companies were for the long term.
“If you lay the right foundations in the short term, we are confident people will recognise that,” he said.
Part of the answer is to have more appetite for risk, properly supervised to avoid “bringing the house down” when things go wrong, he said.
Afolami said the experience of companies which listed in New York rather than London has not been “not uniformly positive”.
Britain had sought to persuade British chip designer Arm to list in London instead of New York, where its shares have been trading below their offer price.
“What we have got to do is to make sure that they don’t think that the grass is greener on the other side,” he said.
(Reporting by Huw Jones; Editing by Alexander Smith)
An IPO, or Initial Public Offering, is the process through which a private company offers shares to the public for the first time, allowing it to raise capital from public investors.
Equity ownership refers to holding shares in a company, which represents a claim on the company's assets and earnings. Shareholders benefit from dividends and potential appreciation in stock value.
The London Stock Exchange (LSE) is one of the world's oldest and largest stock exchanges, where shares of publicly traded companies are bought and sold.
Financial regulation involves rules and laws governing financial institutions and markets to ensure stability, transparency, and protect investors from fraud and malpractice.
A financial services minister is responsible for overseeing the financial sector, implementing regulations, and promoting policies to enhance the competitiveness and growth of the financial industry.
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