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IPE special report May 2018

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Stock Exchange pins hopes on techMARK

In a move designed to recover some of the ground lost to other European markets this year, the London Stock Exchange announced last month the launch of a market for technological companies, to be known as “techMARK”.
The new market, set to go live next month, brings together more than 170 London-listed companies involved in leading-edge technologies, to create a central focus for investors. The exchange hopes new streamlined rules will provide a wider range of young, innovative growth companies with access to the UK equity market.
Critics will ask, however, whether this is a mere public relations exercise to make up for London’s failure to match the supposed success of mainland Europe’s new technology markets such as Neuer in Germany and Belgium’s Nasdaq associate, Easdaq.
Four years ago, the Stock Exchange set up a junior market called AIM, a cheap-to-list facility catering for young companies with limited trading histories. For all sorts of reasons it has not taken off.
Worryingly, there are echoes of AIM in techMARK’s offering of a new route for innovative growth companies that do not have the three-year trading record required to list on the exchange.
The new market wants to link companies from across the main market – ranging from the FTSE 100 to the FTSE Fledgling. London claims: “techMARK is a new approach to stock market investment, uniting companies that share common attributes – in this case a commitment to technological innovation.”
It is hoped this “attribute approach” will particularly help smaller companies that would gain from the increased visibility of being grouped with their peers.
All companies in the computer hardware, computer services, internet, semiconductors, software and telecommunications equipment sub-sectors will automatically be admitted to the new market.
There are also a number of sub-sectors which are predominantly associated with technology, and it is anticipated that many companies within these will match the profile of techMARK. The exchange, supported by an expert panel will assess eligibility.
As Gavin Casey, chief executive of the London Stock Exchange reflected this when he said at last month’s launch: “London is a major centre for the listing and trading of all types of companies including leading technology stocks. The launch of techMARK builds on this success and is part of our long-term drive to support innovative growth companies, including smaller businesses.”
He added that techMARK would provide a range of additional benefits for companies and investors alike. These benefits include increasing the visibility of technological shares by offering duel listing where a company already appears on the FTSE Index. From the investors’ viewpoint, it should be easier to target technological stocks regardless of size or sector, and the index will provide a new a new benchmark. When the market goes live in November, FTSE International will be calculating real -time indices for techMARK.
FTSE International managing director Mark Makepeace claims: “The new techMARK indices will enable investors to invest directly in this exciting new market. I am confident you will see retail funds based on the FTSE techMARK indices before the year end.”
There was some doubt – before last month’s much-trailed announcement – over whether 100 top IT-related names wanted this alternative status offered by techMARK, but that worry seems to have been assuaged.
Michael Jackson, chairman of the Sage Group said: “Technological companies such as Sage have met their needs on the London Stock Exchange for several years. This new move by the Exchange is a vital element in stimulating further investor interest in these companies both from within the UK and abroad.”
Regarding smaller companies, Dhiren Shah, head of the European technology group at Morgan Stanley Dean Witter, said she felt the new market offered excellent opportunities. She added: “There is a significant pipeline of new companies developing some very exciting new products and services. techMARK will help give them easier access to a public market and raise their visibility.”
The exchange is backing techMARK with a series of marketing initiatives. These include in formation on its website, offering investors key current and historic information on techMARK companies – including 15 minute delayed prices – via a link to Hemmington Scott’s on-line company information service.
It is also anticipated by City watchers that a further “initiative” will be orchestrated, lobbying on tax-breaks for small and emerging technological companies. It is no secret that the government is disappointed that the City is being outshone by Frankfurt for financing young technology-oriented businesses. Let us hope that the new market with its German-sounding name turns out to be more than a PR exercise to recover lost ground.

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