'Back capital’s booming science and tech sector' Mayor tells investors

12 February 2013

The Mayor of London, Boris Johnson today encouraged investors to back London’s science and tech sectors to ensure that the latest innovations and ideas are not snapped up by our overseas competitors denying the capital’s economy of the huge benefits they are set to deliver in the coming years.

 

London is already home to both the greatest concentration of tech firms in Europe and a world leading centre for life sciences where the quality of its research in on a par with the world’s greatest science cities of Boston and San Francisco. It has everything a new start up could need to grow from incubator space where innovators can find research and other partners to the finance to turn ideas into enterprises.

 

However, many research breakthroughs conceived by small to medium enterprises in the UK can find it challenging to access longer-term equity finance - including traditional bank loans - needed to take innovations to market and maximise their potential. There is strong evidence that many high-tech ideas conceived and developed in London are developed overseas and primarily in the US.

 

The Mayor wants to ensure that these high growth companies have greater access to finance at every stage of their development so they stay and grow in the capital contributing jobs and growth to the city's economy. But in the UK, there are four separate taxes, including stamp duty, on UK equity investment and he believes that reducing or abolishing some of these for investments in high-growth companies would encourage a wider set of potential investors to accelerate the growth of the important science and tech sector.

 

He particularly believes that stamp duty should be abolished for investments on London Stock Exchange’s ‘Alternative Investment Market’ (AIM) where most of the capital’s high growth start ups will seek listing.

 

The Mayor was speaking as he visited London Stock Exchange to officially open the day’s trading and to meet representatives from successful technology and life science companies.

 

The Mayor of London, Boris Johnson, said:

 

“London is brimming with innovative technology and life science entrepreneurs, many of whom have the potential to build world beating businesses that will create thousands of jobs for our great city.

 

“However we must ensure that we provide the fertile ground these enterprises need with an environment that brings innovation together with the right investors. If we do not get it right we risk losing this high value sector to our competitors in Northern Europe and the US.”

 

 

Xavier Rolet, CEO, London Stock Exchange Group: 'London is home to some of the world’s most exciting high growth, science and technology companies. We need to support these businesses so they can grow and create jobs. The best way to fund start-ups is not through bank loans but through equity finance. We are delighted to be working alongside the Mayor of London to make it easier for Britain’s entrepreneurs and small businesses to source growth capital. Together we must do all we can to support them.'

 

Specifically, the Mayor backed the following:

 

• A reduction in taxes on equity investment to widen SME's access to equity finance. This includes proposals developed by London Stock Exchange calling to abolish Stamp Duty for companies not listed on a recognised stock exchange. This will help attract a wider set of investors to growth businesses to deliver long term economic gain;

 

• The Mayor welcomed London Stock Exchange's new High Growth Segment to bridge the gap between main market and AIM. It is expected that the proposed High Growth Segment will improve access to the IPO (Initial Public Offering) market for high growth businesses from the creation of this new, distinct high growth segment on the Main Market by offering a less prescriptive free float requirement at admission. This will suit companies which are looking for a transition route to the Main Market.

 

• To breakdown the perception that smaller companies are inherently more risky than larger enterprises, deterring investors from financing high growth companies. The FSA should consider the impact of the restrictive Conduct of Business rules which have the unintended consequence of preventing individual investors from buying stocks outside the FTSE 350.