High Growth Segment: New market now open

High Growth Segment: New market now open


Author: Martin Letza

The London Stock Exchange (LSE) has announced that its new market segment aimed at fast-growing companies is now open for applications for admission to trading.

The newly-formed High Growth Segment will present opportunities for both companies and investors alike.

On 27 March the LSE published its final rulebook for the High Growth Segment, the new segment of the Main Market designed to assist high-growth companies requiring further capital to continue their growth.

This follows the Government's announcement in September 2012 of its intention to make the UK a more attractive listing destination for fast-growing, high-tech companies.

The rulebook sets out the criteria to be met by companies seeking admission to the High Growth Segment. By featuring less stringent requirements than for admission to the Official List, particularly in respect of the number of shares required to be in public hands, the eligibility criteria reflect the LSE's aim to provide companies with a transitional route to the Official List, and to help them prepare for the listed markets over time.

Key entry rules include that the issuer must: 

  • be an EEA incorporated company
  • be a public limited company or similar EEA corporate structure
  • be a trading business 
  • have revenue growth of 20% over a three year period
  • have at least 10% of the securities to be admitted in public hands (minimum free float)
  • have shares in public hands with a value of at least £30m, the majority of which must be raised at admission by the issue of new securities or sale of existing securities
  • control the majority of its assets
  • publish an approved prospectus
  • set out its intention to progress to the Official List.

Significantly, the introduction of a 10% minimum free float (currently 25% on the Main Market) matches the threshold set by Nasdaq, perhaps in an attempt to stem the current trend of high growth technology companies floating on the LSE's US rival.

LSE CEO Alexander Justham said: "Ensuring that the UK's fast growing and most dynamic companies have access to equity capital is a priority for London Stock Exchange."

"The High Growth Segment will provide an additional attractive choice, giving these companies a launch pad for further success."

Companies with shares trading on the High Growth Segment will not be admitted to the Official List (the handling of which is soon to be taken over by the newly formed Financial Conduct Authority), so will not be required to comply with the Listing Rules.

However, the LSE's Admission & Disclosure Standards, plus applicable parts of the Prospectus Rules, Disclosure Rules and Transparency Rules, will need to be adhered to.

For further details on admission to the High Growth Segment, please contact Martin Letza.