Can PISCES help UK markets land the next unicorn?

All eyes (yet again!) on Chancellor Rachel Reeves who, it is expected, will tonight outline plans for a UK private stock market in her first Mansion House speech.

According to media reports this morning, it is understood that Reeves will unveil plans to legislate for a regulated stock exchange system where shares in private companies could be traded in May next year – a “world first”. The platform, known as PISCES — “the Private Intermittent Securities and Capital Exchange System” — was originally proposed earlier this year under the Conservative government.

According to research from EY, the London Stock Exchange attracted eight new companies in the first half of 2024. The listings – covering the London main market and AIM – raised £513.8m in total.  Whilst the total proceeds raised in H1 2024 is slightly down on the £593.2m raised in H1 2023, IPO activity is growing after record lows in Q4 2023. Looking at this year, between July and October 2024, the London Stock Exchange saw just three new companies list on the main market and AIM, including notably Applied Nutrition, the second largest IPO of 2024 in the UK and largest consumer IPO since 2021 at a value of £350 million, though well below the initial £1bn valuation reported earlier this year.

One would question whether London has lost its sparkle when it comes to public markets – but the answer is clear to the Chancellor. The expected pension reforms combined with PISCES will allow both private and public markets to access funding. The proposal for this new platform will boost the UK market, by helping support the pipeline of future listings on the public markets and supporting those businesses to grow. The idea is to provide elements from public markets, "such as those that offer multilateral trading, and elements from private markets that provide greater discretion on what company disclosures should be made public". A consultation was open earlier this year and closed under the previous government in April, before the Labour party came back into power in July. Reeves is expected to publish a response to the consultation tonight and outline plans for PISCES alongside pension reforms. As City AM revealed today, the Chancellor will now bring forward legislation for the new market in May next year to allow companies to trade their shares periodically without the rigmarole of an IPO.

PISCES will certainly boost the UK’s capital markets as increased access to liquidity will support private firms in scaling up and growing while helping investors realise their gains sooner by making it easier for them to find buyers for their shares. But a fundamental concern remains. Whilst this is likely to boost private markets, public listings will still act as a deterrent for many companies and there is unlikely to deliver a strong pipeline of IPOs as intended. Time will tell.

What is clear though is that those private companies looking to access fundings through PISCES will need to clearly communicate their growth strategy, corporate governance to get the best valuations possible in a similar way they would consider the public markets.  Hopefully it will help tip the scales towards the UK.