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The consultation paper confirms a radical approach to bolster the international competitiveness of the UK markets and return to a disclosure-based listing framework.

By Mark Austin, Chris Horton, James Inness, Anna Ngo, and Johannes Poon

The FCA today published consultation paper CP23/31 setting out detailed draft rules for the new UK listing regime. The publication represents the final stage of the journey to reshape the UK Listing Rules which started with the launch of Lord Hill’s UK Listings Review in 2020. Most of the key changes reflect proposals in the FCA’s preceding consultation paper CP23/10 published in May 2023 (see this Latham Client Alert for further details).

The new rules aim to make London a more attractive listing venue for founder-led and other innovative IPO candidates.

By Chris Horton, James Inness, Anna Ngo, and Johannes Poon

On 2 December 2021, the UK Financial Conduct Authority (FCA) published a Policy Statement (PS21/22) confirming the following key changes to its listing rules that took effect from 3 December 2021:

  • Limited form of dual class share structure permitted under the premium listing segment

Premium-listed issuers can now adopt a targeted and time-limited form of dual class share structure (DCSS) which would operate to prevent the removal of a director and deter takeovers during a five-year period following admission.

Companies and investors must consider the impact that poor corporate culture may have on their potential to achieve an exit, in particular an IPO.

By David Berman, Richard Butterwick, Chris Horton, Robbie McLaren, Anna Ngo, Nell Perks, Catherine Campbell, and Charlotte Collins

It is now apparent that no institution or business unit, whatever its geography, industry, sector, or size, is above the negative impact of a poor culture. Culture- related issues at Uber, Sports Direct, Boeing, and others highlight the implications of getting things wrong, including financial loss, reputational issues, and damage to investor confidence.

Often defined as “the way that people within an organisation behave when no one is looking”, culture is a growing area of focus for regulators and policymakers around the world. The focus on culture has become more acute during the COVID-19 pandemic, as investors and consumers observe and judge companies based on their navigation of the crisis, particularly treatment of employees and wider societal stakeholders.

Buyout firms planning an acquisition or preparing a portfolio company for exit must consider the impact of poor corporate culture, particularly on a potential IPO.

By David Berman, Chris Horton, Robbie McLaren, Anna Ngo, Nell Perks, Charlotte Collins, Catherine Campbell, Tom Evans, and David Walker

No institution, whatever its geography, industry, sector, or size, is above the negative impact of a poor culture. Culture-related issues at Uber, Sports Direct, Boeing, and others highlight the implications of getting things wrong, including financial loss, reputational issues, and damage to investor confidence.

Often defined as “the way that people within an organisation behave when no one is looking”, the focus on corporate culture has become more acute during the COVID-19 pandemic, as investors and consumers observe and judge companies based on their navigation of the crisis, particularly the treatment of employees and wider societal stakeholders. LP expectations on PE firms to adequately diligence and monitor portfolio company culture are also rising, and the global regulatory direction of travel is clear. In our view, buyout firms planning an acquisition, or preparing a portfolio company for exit must consider the impact that poor corporate culture may have, in particular on an IPO.

Cornerstone investments can assist a firm’s overall exit objective, particularly when there are bidders for a portfolio company but no outright buyer.

By James Inness, Tom Evans, David Walker, Sonica Tolani, Connor Cahalane, and Catherine Campbell

Cornerstone investments, which involve taking a stake in an about-to-list company, have been popular in Asia and in Nordic countries for several years, and are becoming a more regular feature in European deals. The £300 million IPO of peer-to-peer lender Funding Circle in November 2018 and the £2.18 billion IPO of payment processor Network International in April 2019 were both completed with cornerstone investments of around 10%.

Why Consider a Cornerstone Investment?

Despite difficult market conditions, we have seen continued interest in IPOs from PE firms, either as a sole exit option or alongside auctions in a dual-track process. Cornerstone investments can assist a firm’s overall exit objective, particularly if a firm attracts bidders for a portfolio company but fails to find an outright buyer. Strong early support from cornerstone investors can help with marketing an IPO to other investors, increasing the likelihood of a successful listing and paving the way for an exit.

By James Inness and Sean Meehan

Latham & Watkins recently advised the largest global music streaming subscription service in the world, Spotify, on its successful New York Stock Exchange (NYSE) listing using a novel direct listing process.

Spotify’s direct listing did not involve a primary or secondary offer. In addition, no underwriters were appointed, no roadshow process was undertaken, and no IPO-specific lock-up agreements were entered into with existing shareholders.

Instead, these pillars of a typical underwritten IPO were replaced with an offer structure based on a purely market-driven approach to price setting with existing shareholders being free to sell all or part of their shares from day one without the usual 180 – 360 day post-admission restrictions. In addition, the roadshow process was replaced with a public investor day that was available to view live on its website by both institutional investors and retail investors. While certain banks acted as financial advisors in respect of the listing, they had no role in advising on investor meetings, facilitating price discovery activities, or conducting after-market stabilisation activities.