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The first trade set to take place on the London Stock Exchange Group’s new private markets platform will not be made directly by a private company, in a reversal of widely held expectations.
The Private Intermittent Securities and Capital Exchange System, or “Pisces”, was first proposed by Rishi Sunak’s Conservative government.
The proposal is also supported by Labour chancellor Rachel Reeves, who has said it would “reinvigorate the UK’s capital markets” by allowing investors, staff and founders in private companies to sell shares on regulated exchanges on specified days.
LSEG said on Friday that the first transaction on the platform would be made by investment company Tradable Private Equity (TPE) through an investment structure that holds shares in Oxford Science Enterprises.
Oxford Science Enterprises is a venture capital firm that backs technology and life sciences companies and was not listing its shares itself, TPE said.
Many British private companies were reluctant to be the first to list their shares, said a person familiar with the matter, as they wanted to first understand if the system worked as promised.
They added that several private companies were expected to directly list their own shares in the future, but for those that wanted to avoid the cost and control mechanisms of doing so themselves, trading through TPE made more sense.
Private investors in Oxford Science Enterprises can sell their shares to TPE, which will then become a shareholder of the venture capital firm, allowing investors to trade these shares on the LSE platform.
As well as being the first transaction on London’s private markets exchange, it will be the first transaction conducted by TPE itself.
Fred Bouverat, founder of TPE, told the FT that about half the volumes in the private equity market were made directly through special purpose vehicles.
“We created this structure to be a useful tool both for companies and the market in general,” he said. “We’re talking to lots of other companies as well that might not have the desire or ability to list directly themselves.”
TPE will make money by charging investors an annual 1 per cent management fee, Bouverat said. His company intended to run quarterly auctions to provide access to Oxford Science Enterprises stock.
Julia Hoggett, chief executive of the London Stock Exchange, said companies and structures would be able to use the platform “in innovative ways to access the solutions that best suit their needs”.
The window to buy the shares will open on March 25.