The London Stock Exchange and private market investment platform Crowdcube formed a strategic partnership to provide retail investors with access to late-stage, high-growth private companies through the LSE’s new Private Securities Market.
The collaboration opens a new pathway for eligible investors among Crowdcube’s two million members to invest in private companies on the same terms as large institutional investors.
Widening access through the private securities market
The London Stock Exchange was confirmed in August as the first operator approved by the Financial Conduct Authority (FCA) to run a PISCES (Private Intermittent Securities and Capital Exchange System) market. This new market allows private companies to use the Exchange’s public markets infrastructure to access liquidity while remaining private.
A key principle of the PISCES initiative has been to widen investor access to private companies. Through this new partnership, late-stage private-market secondary transactions on the Private Securities Market will be opened up to eligible Crowdcube investors on the same terms as institutional players. Private companies using the new market will, in turn, gain access to Crowdcube’s extensive investor base.
Julia Hoggett, chief executive officer of London Stock Exchange plc, said: “This partnership is a unique opportunity to enable private companies and investors to utilise the same infrastructure and technology that underpins the London Stock Exchange’s public markets, while leveraging Crowdcube’s experience as a leading private markets investment platform in the UK. We are delighted to be working together with Crowdcube as we advance our shared vision for a connected and inclusive funding continuum.”
A new ecosystem for private companies
The partnership aims to create a more inclusive and liquid private capital market ecosystem, providing crucial infrastructure for European companies that are staying private for longer, whether by choice or necessity.
Matt Cooper, co-chief executive officer of Crowdcube, commented: “As many of Europe’s leading late-stage companies remain private for longer – by choice or necessity – they need the right infrastructure to keep them investing and innovating in the UK. The London Stock Exchange’s Private Securities Market is an innovation that strives to provide precisely this support – while acting in a wholly inclusive way that ensures that not only institutional investors get a piece of the action, but a much broader base of investors are supported and encouraged to do so too.”
Cooper added: “Our objectives in partnership with the London Stock Exchange are clear: to make the UK the most attractive place for private companies to scale, as well as attract and retain the best talent; and to give as many investors as possible the chance to share in the value those companies create.”
How the partnership works
Under the agreement, Crowdcube has become a Registered Auction Agent (RAA) for the Private Securities Market. This allows it to act as a conduit for its eligible investors, providing them with access to ownership in businesses that would previously have been unavailable until after an initial public offering (IPO).
The structure also offers a new way for private companies to attract and retain talent by using the Private Securities Market to manage regular liquidity events for employees and early shareholders. Through the partnership, companies can use Crowdcube’s technology to manage liquidity events for employee share option schemes and provide opportunities for loyal customers to become shareholders before a public listing.
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