UK tech companies should list on US stock markets if they want to get better analyst coverage, raise more money and access more suitable investors, according to the head of Nasdaq.
Bruce Aust, NASDAQ’s vice-chairman and head of new listings, is reported to have said that the London Stock Exchange is taking the "right first steps" to attract more technology companies but it is still lagging behind the US.
“The UK is getting there,” he said on a trip to London. “The government is recognising that most jobs are going to come from these entrepreneurial companies. But Europe, and the UK in particular, needs to build that analyst community.
“When you go public, you want analysts to write about your stock. In the US, the average tech company has 20 analysts covering its stock. You don’t have that kind of numbers in the UK.”
Aust pointed to London-based financial data firm Markit, which listed on NASDAQ earlier this year for $4 billion (£2.5 billion) as an example of a UK tech firm listing in the US.
Speaking at the time of the initial public offering (IPO) Markit Founder Lance Uggla said listing in the US would give it the best access to capital to grow.
There are currently 14 UK companies listed on the NASDAQ, including Vodafone, WPP and Aviva. US heavyweights such as Facebook and Apple are also listed on the 43-year-old market.
Aust highlighted that 2014 has been a record year for NASDAQ thanks in large to listings from wearable camera company GoPro, Chinese microblogging website Weibo, and Virgin America.
When asked if UK tech firms can raise significantly more in the US, he said: "I disagree with that as a generalisation."
Stuttard added that there have been a number of recent tech floats in London that have been over-subscribed due to an overwhelming amount of investor support.
The London Stock Exchange has taken a number of steps to encourage homegrown tech firms to list on its markets. For example, It created a new market called the High Growth Segment, which allows firms to retain the vast majority of their equity when going public.
The market enables medium-sized companies that are too large for the Alternative Investment Market (AIM) but not yet ready for premium listing to raise capital while holding on to 90 percent of the firm's shares. Previously businesses looking to float on the LSE were asked to make at least 25 percent of their shares available. However, they could choose to list just 10 percent if they listed on the Nasdaq in the US.
The 213-year-old exchange also created its "Elite" programme in April in a bid to support tech companies that could list on its markets in the near future. The programme currently has 33 members.
Irfon Watkins, CEO of Bristol-based adtech firm and Elite cohort member, Coull, told Techworld: "If we feel the UK isn’t up to speed enough and we can get a better deal for our shareholders by floating on Nasdaq then we will do that but personally I’d love it to be done in London.
"From our side, it’s a case of whether we feel the market understands what we do locally. If it does, then we’ll go with a float in the UK but we’re also talking in the US as well.
"Although we’re not on a programme there, it’s a similar type of process."
Image credit: Flickr/bfishadow
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