Chancellor’s bid to lure tech firms ‘sows seeds of scandal’

Veteran City fund manager Richard Buxton has warned that plans to lure tech companies to list on the UK stock market will ‘sow the seeds of scandals and losses’. 

In the Budget this month, Rishi Sunak presented a stock market review by Lord Hill as the way to turbocharge the City of London. 

Hill proposed ‘dual class shares’ that would enable founders and directors of fast-growing firms to hold more voting power than ordinary shareholders. 

Warning: A move to bring the UK in line with rivals would ‘reduce investor protection’ and ‘lower listing standards’

He also recommended reducing the portion of shares that have to be held in public hands from 25 per cent to 15 per cent – another move that would allow founders to retain more control of their companies after a stock market float. 

These types of arrangements have proved popular with entrepreneurs and fast-growing tech firms in other countries such as the US and Hong Kong. But Buxton, a highly regarded fund manager at Jupiter, said a move to bring the UK in line with rivals would ‘reduce investor protection’ and ‘lower listing standards’. 

He warned that Lord Hill’s proposals would give company founders ‘up to 20 times’ more voting power than ordinary shareholders. 

‘Imagine the furore if it was suggested that university graduates had 20 times the voting power of non-graduates in a democracy,’ he told The Mail on Sunday. 

‘Equality of voting rights for the providers of equity capital is a principle which the UK should be championing to the last, irrespective of what others choose to do in chasing ‘hot’ IPOs.’ 

London attracted just 5 per cent of IPOs globally between 2015 and 2020, lagging behind China and the US. Buxton – who sold the fund firm he co-founded to Jupiter Asset Management last year – said Hill has used the success of US tech giant Apple as evidence of a ‘fuddy-duddy regulatory regime in the UK stock market which puts off ‘the companies of the future’ from listing in London’. 

But he hit back: ‘I am inherently suspicious of a non-UK-based company which wishes to raise capital in London. Why have you not sought capital in your home market? Is it because they know you too well and would be reluctant to fund you?’ 

He added: ‘The Hill Review wants to support and promote a vibrant City of London, particularly pos-tBrexit and the associated threat of increased competition from other European capitals. I am supportive of that aim, [but] this does not mean that the City’s success should be measured by an IPO league table against other financial centres.’

This post first appeared on Dailymail.co.uk