Icons for the Monzo and Starling banking apps on a smartphone.
Adrian Dennis | AFP via Getty Images
LONDON – The UK should reform lists and visa application rules to help the £ 11 billion ($ 15.3 billion) fintech sector thrive after Brexit, according to a government-commissioned review Friday.
According to industry association Innovate Finance, Britain is one of the leading fintech players worldwide, attracting $ 4.1 billion in venture capital investment last year. It is home to several fintech unicorns – private companies worth more than $ 1 billion – including Checkout.com, Revolut and Monzo.
The review, led by former Worldpay boss Ron Kalifa, makes some notable proposals, including: the creation of a new accelerated visa process to attract international fintech talent; a £ 1 billion start-up fund backed by institutional investors; and a relaxation of the listing rules to encourage late-stage fintechs to go public.
“This review will be a major contributor to our plan to keep the UK fintech crown, create more skilled jobs and provide better financial services to people and businesses,” said Treasury Secretary Rishi Sunak.
Kalifa said, “We must continue to nurture our start-up culture, but crucially, we must also empower our fast-growing companies to become global giants.”
The government has tasked Lord Hill, the former EU financial stability commissioner, to lead a review of the UK listing regime. Prime Minister Boris Johnson reportedly met with executives from Deliveroo, Revolut and other tech companies late last year in an attempt to convince them to list in London.
Kalifa’s report suggests a reduction in the percentage of shares held by public investors to avoid diluting the early backers of fintech start-ups, as well as ‘golden share’ or dual-class equity structures that would allow founders to take control of their companies. preserve. and watch out for hostile takeovers.
Calls to reform the lists are particularly timely, as a slew of companies, including Deliveroo, Wise and Darktrace, are rumored to be debuting later this year. In the fintech space, several companies – including Revolut, OakNorth and Checkout.com – are surrounded by IPO speculation as their valuations have grown to billions of dollars.
“We want to encourage companies to join the public markets,” Charlotte Crosswell, CEO of Innovate Finance, told The Washington City Times.
“As someone who has been involved with public markets for most of my career, I don’t recall the pipeline being so good for tech and fintech,” added Crosswell, who previously worked for the Nasdaq and London exchanges.
The review also calls for a greater focus on other regions outside London, which dominate in terms of investment, and a center for finance, innovation and technology aimed at boosting international cooperation.
Fintech could support the UK financial services industry after Brexit. European financial centers have benefited in the weeks after the UK ended EU rules on December 31. For example, Amsterdam registered a sharp increase in the number of transactions it records, while a large proportion of the derivatives transactions denominated in euros have left London for New York.
“Now that a tremendous amount of work has been done to enable new players to enter the market, it is vital that the right steps are taken to support those fintechs as they scale up,” said Nick Lee, chief of regulatory and government affairs at OakNorth. .
“Now that Britain has left the EU, we have an opportunity to create more proportionality in the financial services and regulatory environment so that successful UK fintechs and new banks can continue to scale and grow effectively and compete with larger incumbents,” Lee added.
Kalifa’s recommendations have been shared with Sunak, who will use the review to decide on any policy changes.