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The London Stock Exchange Group is aiming to make it easier for international companies to join the City’s blue-chip index by reducing the amount of shares that need to be publicly traded.
FTSE Russell, which is owned by LSEG, on Monday night published a consultation into proposals to reduce the free-float requirement — the amount of shares required to be publicly traded — from 25 per cent to 10 per cent for non-UK incorporated companies that are listed in London.
If implemented, the index provider’s move would give international companies the same free-float requirement as British businesses for the blue-chip FTSE 100, the mid-cap FTSE 250 and other FTSE indices.
The change would be particularly attractive to upcoming listing candidates, such as Visma, a Norwegian software company considering a €19bn stock market listing in London, and Uzbekistan state-owned gold producer Navoi Mining and Metallurgical Company (NMMC), which is targeting a potential $20bn dual listing in London.
The free-float move is the latest step in a series of efforts designed to revive the London Stock Exchange and convince more companies to list in the UK. Last year there were just nine main market listings and 13 on Aim, London’s junior stock exchange, with companies raising £2.1bn, according to LSE data.
There have already been reforms to listing rules that allow international companies to trade in euros or dollars and still be included in the FTSE index.
Last week UK chancellor Rachel Reeves hailed a “golden age” for the City as changes in tax and regulation smooth the path for companies to raise money in the UK.
The free-float requirement for international companies was already reduced by FTSE Russell from 50 per cent to 25 per cent in 2022 following changes to the listing regime by the Financial Conduct Authority. Dropping the requirement to 10 per cent was considered “too extreme” at the time.
Mark Austin, partner at Latham & Watkins and member of the UK government’s capital markets industry task force, said: “The reform journey has been about maintaining London’s position as a leading international listing venue and capital market. With the emphasis on international.
“There are a lot of international companies listed here and a lot more that want to list,” he added. “Aligning the minimum free-float requirements for domestic and non-domestic issuers is logical and credit to FTSE for ironing out a rule that had lost any purpose.”
Non-British companies were historically required to have a higher free-float requirement than domestic companies due to concerns about whether companies with foreign controlling shareholders should be considered eligible in the FTSE 100 and 250 indices.
The LSE has said there would be no immediate impact from the change to the current crop of constituents in the FTSE index, but its longer-term impact will be judged by which international companies choose to list in future.
The consultation is due to close on February 26 and feedback will then be provided to FTSE Russell’s external advisory committee. Market participants are typically given a month’s notice before changes are made.
Charles Hunt, head of research at Peel Hunt, welcomed the proposal, saying: “Anything that makes London more competitive and attractive to international businesses is a positive.”