How UK Capital Markets are Revolutionising Access to Capital for Growth-Stage Businesses

By Founders Forum Group & London Stock Exchange // 16 April 2024

The London Stock Exchange is leading innovation to open up more funding opportunities for growth businesses.
The London Stock Exchange is leading innovation to open up more funding opportunities for growth businesses.

Through regulatory reforms like PISCES, the number of options available for founders to access capital in the UK is growing.

Darko Hajdukovic, Head of New and Private Markets for the London Stock Exchange PLC, says that changes to regulation and new funding opportunities are benefiting founders in the UK.

One ground-breaking initiative is the proposed Private Intermittent Securities and Capital Exchange System (PISCES) regulatory framework, which could create the world’s first regulated crossover market and is designed to allow private companies periodic access to a broader group of investors within the private market perimeter.

Darko Hajdukovic is the Head of New and Private Markets for the London Stock Exchange PLC.

We spoke with Darko for insights into the evolution of UK capital markets and the transformative potential of PISCES.

PISCES: Bridging the Gap Between Private and Public Markets

In March this year, the UK Chancellor, Jeremy Hunt, announced more detailed plans for PISCES as part of the Spring Budget.

Devised in response to the challenges faced by both growing and mature companies, PISCES offers a unique solution to the liquidity dilemma by enabling private companies to access liquidity whilst remaining private.

“PISCES regulation would solve a very real problem by bridging the gap between the private and public markets, creating a genuine boost to the scale-up economy in the UK and for any company that wishes to grow here,” Darko explains.

“It would allow management to focus on growing their companies while, at a frequency that is right for them, enabling shareholders to realise their gains, allowing companies to manage their cap table, and allowing new eligible investors to buy shares in exciting companies.”

How PISCES Works

The PISCES regulation allows any appropriately regulated venue in the UK to operate a crossover market.

The venue would be company-led, with the business able to opt into auctions on a periodic basis. Investors could submit their requests to buy or sell into a private auction that would settle within a matter of days. This would also allow a broader set of investors to buy shares in private companies, whilst the companies retain control over the types of investors who can gain access to the auction.

Critically, the market has been designed to ensure that companies remain private, with information remaining within a dedicated portal, and allows the company to operate between auction windows just as they normally would as a private company.

“For growth stage businesses specifically, we welcome the Government and the FCA’s ongoing steps to create this new framework” Darko notes.

“The introduction of this venue framework would provide private companies with choice not only in how and when they provide opportunities for existing investors to trade their holdings, but crucially to onboard new investors.”

PISCES and the Path Forward

For founders eager to tap into the potential of PISCES, proactive engagement is key. The Government is keen to ensure that PISCES venues are up and running as soon as possible and is committed to having the regulatory framework for the venue up and running by the end of the year.

Darko encourages companies to get in touch in with the London Stock Exchange to better understand the necessary preparation and to position themselves to take advantage of the opportunities offered by PISCES.

The need for new investors and more efficient methods of investing has never been greater. As the fundraising landscape in the UK continues to evolve, Darko envisions smooth continuum of finance across both public and private markets, fuelled by ongoing reforms and innovations.

“We are optimistic about the strength of the UK market,” he says. “The London Stock Exchange’s job is to ensure that a company’s needs, no matter their size, can be met in the UK, so that founders can start great companies here and have a long-term home for them.

“We look forward to working with the industry in the coming months to bring this innovative solution to market.”

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This article is sponsored by the London Stock Exchange.