As the largest e-commerce IPO in Europe to date, the THG IPO demonstrates the phenomenal level of demand for high-growth technology companies in London. Currently the technology sector is the fourth largest sector on the market, representing approximately 11% of the total market capitalisation – almost four times more than the sector represented just 5 years ago. There has been considerable appetite from investors, as has been demonstrated by the listings of tech companies as diverse as Trainline, Network International and Avaast.
What the IPO also demonstrates is how London Stock Exchange can provide high-growth technology companies with a choice of markets on which to list. By using the Standard Segment of the Main Market, THG has retained its desired flexibility while also adhering to regulatory and corporate governance standards allowing it to attract substantial demand from some of the largest investment managers in the world.
The Standard Segment may not be as well understood as our other markets. Its regulatory framework is based broadly upon EU directives and as such, provides a listing standard which is in-line other stock exchanges across Europe.
By listing on the Standard Segment, THG has been able to introduce a ‘founder share’ – which in itself is not an unusual mechanism in the global technology sector. In THG’s case, this ‘founder share’ can only be deployed in event of takeover.
This requirement is a reflection of the trend among some technology companies to go through multiple and increasingly large private funding rounds. At point of IPO, therefore, it is rare for founders to have retained majority control over their business.
In the case of THG, founder Matthew Moulding wanted to continue the growth of his company in the public realm and, for a period of time, to ensure that his business would not be subject to a takeover. This degree of certainty was important for him and his company. Listing on the Standard Segment enabled him to gain this.
The THG IPO demonstrates that public market investors are willing to back founders and support their growth aspirations in the public markets.
It underlines the attractiveness of London for technology companies allowing them to access a global investor base, in one of the most respected regulatory regimes in the world, and to achieve this with flexibility of founder shares.
We are delighted THG has chosen a listing in London to begin its journey as a publicly listed company.
Watch our video discussion with Linklaters to find out more about the process and the benefits of using a Standard listing as a route to access the London market.
Head of London Stock Exchange Equity Primary Markets