Welcome to the Australian Investment Summit Podcast, your gateway to insights from industry leaders shaping the future of global investment. In partnership with the prestigious London Stock Exchange, we bring you engaging conversations with visionaries and innovators from Australian companies poised for international success.

Bird & Bird Partner Michael Dawes joins us to discuss the evolving landscape of London's capital markets amid recent regulatory changes and global economic shifts, sharing insights on opportunities for Australian companies aiming to list on the London Stock Exchange.

For further information on Bird & Bird or if you’re interested in attending the summit, please register via our website: https://australianinvestmentsummit.com/

Join us as we interview the strategic minds driving market advancements and explore why the UK-based investor landscape is a pivotal opportunity for growth-oriented enterprises. From discussions with representatives of the London Stock Exchange to exclusive interviews with CEOs of companies participating in the Australian Investment Summit, this podcast unveils the strategies, aspirations, and market insights that define success in today’s dynamic investment ecosystem. 

Tune in to gain firsthand knowledge and discover investment opportunities with the Australian Investment Summit Podcast.

Read the Conversation:

Welcome, my name is Jack Colreavy, Associate Director for Barclay-Pierce Capital, and today I am hosting on behalf of the Australian Investment Summit, a London-based event hosted at the London Stock Exchange on July 10th, showcasing the best of Australian business and innovation. A key sponsor for the event is the legal practice Bird & Bird, and today I have the pleasure of Michael Dawes joining me. Michael is a partner in the capital markets and M&A space, and I do have the pleasure of working with him professionally as well.

So thank you, Michael, for joining us. Thanks, Jack. Pleasure to be here.

Looking forward to getting involved in AIS. Yes, I mean, we'll talk about that a little bit more a bit later, but yeah, it should be a very exciting day. So let's start at the sort of the top and give our audience an introduction to Bird & Bird and to yourself and what you do as a partner in the capital markets and M&A team.

Sure. Well, Bird & Bird is an international law firm. We're in over 30 cities worldwide.

We've recently opened a new office in Tokyo, for example. So we're throughout Europe, into the Nordics, UK, Middle East, and Far East. And we act in a number of spaces, but the heart of the firm really is technology and disruptive industries.

And it's a really great blend of clients we have from, you know, arm at the upper end to smaller startups and everything in between. But mainly we're acting for companies that have some sort of disruptive IP. And we're doing a lot, for example, in clean tech, a lot in just general tech, a lot in AI.

Now, my practice, I joined the firm about a year ago from a boutique firm where I acted for a number of technology companies, but also resources companies as well. I had a bit of a mixed practice. And I used to work in Australia as well.

I worked at Minter Ellison in Sydney for a couple of years back at the start of this century. And so I developed this practice of Australian companies in the resources and technology space, coming over to London and raising money using London's capital markets. Now, mainly that was on AIM, although increasingly on the larger main market over here.

But it's a pretty well-trodden path of Aussie companies looking to raise money here and use the capital markets here. Separately to that, I also advise on public M&A, and I do a little bit of investment funds work as well for some special situations funds. But its main practice would be the equity capital markets.

And that experience between sort of ASX and London's stock exchange, I think is sort of very helpful, particularly for AIS type clients who are looking to access capital markets from London as Australian companies. In fact, I was at a free trade agreement. It's the one year anniversary of the free trade agreement between Australia and the UK.

And it was great to sort of hear all different stories about businesses that have made that sort of jump into the export market to the UK. And it could be another opportunity for these businesses to then also access the capital markets here in order to grow that European presence. That's right.

And, you know, there's a lot of that sort of thing happening. So for example, I was speaking yesterday at Australia House, around the corner, had a delegation of Aussie companies coming over as part of London Tech Week. And there's 30 or 40 really interesting looking companies of various sizes with some interesting product looking to access London.

They're not necessarily capital markets, but you know, that's fine. We can help companies expand into Europe with our network. We also got a Sydney office so we can help them from that end.

So for us, that sort of opportunity is really interesting because you get to see a lot of very good companies. And they're all coming to London for a variety of reasons. And you get to talk to some really fascinating people.

Well, Aussies are great people to talk to. They are, they are. So you, very, very smart man you are there.

So you work in the capital market space. Over the last sort of couple of years, it has been a challenging macro economic environment. Can you sort of speak to your experience over the last couple of years? What sort of has kept you busy? Because, you know, IPOs have been, there's been a bit of a dark IPO market.

So it's obviously not in that space. Yeah, so the UK's had more than its fair share of troubles, I think, over the last few years. You know, we've had three or four prime ministers.

We've had the impact of COVID like the rest of the world. We've had the impact of the war in Ukraine, a lot of uncertainty. The problem as well is we've had as part of that negative sentiment, you end up with the newspapers being quite negative on London.

And in particular, stories like Arm choosing to list on Nasdaq, you know, Arm, great big homegrown company, real success story, doesn't want to list here, chooses Nasdaq instead. And unfortunately, the newspapers love that sort of thing. So London got talked down quite heavily over the last few years.

Brexit as well, lots of uncertainty politically, and lots of adjustment for our economy post Brexit. Now, I think the corner has been turned. So there's a few reasons for that.

I think, first of all, you're seeing inflation coming down, you're seeing probably a drop in interest rates, you're seeing a political change in the UK. You know, I'm not going to pick a side here. But I think we all know which way the election is going to go here.

And that's been priced in so people accept where it's going. You know, people want stability, they don't want uncertainty. The other big thing recently is there's a return to the UK's capital markets.

So for example, Raspberry Pi listing over the last few days has been a real success story. Now, Raspberry Pi, ironically, a company that Arm is a big investor in, not as big as Arm, of course, you know, only about a half a billion market cap on listing, but a real homegrown success that chose to list here rather than on NASDAQ. Now, it wouldn't have done that just for sentimental reasons.

It will have done that because that's the right place for its shareholders to be in the right place to raise money. And Arm cornerstone that raise. So that has really got the attention of the newspapers.

And I'm seeing a turn of sentiment only this morning in The Telegraph, an article saying we've turned the corner in London and the capital markets are back open again. And we're seeing that here as well. We're seeing a lot of interest from international companies looking to access the markets here.

The other thing I'd say that's worth touching on is that the government has been doing all of it, all that it can post Brexit to move away from some of the restrictive European legislation that was driving a lot of our capital markets rules and to make the London markets easier to list on by some quite important changes to the listing rules and the prospectus rules here. And they do broadly two things. First, they're going to make it easier for companies to list and they're going to reduce the ongoing obligations of listing.

But secondly, they're going to make it more attractive and easier for retail investors to get involved. And that provides important liquidity. If you compare the ASX to AIM or the London Stock Exchange, historically, the ASX has been a very retail driven market in the way that the UK markets haven't been so much.

These softenings of the rules will help retail investors get involved. And there are also a number of platforms emerging to facilitate retail investors participating in fundraisings on the same terms as the institutions. All of that is helping drive liquidity, helping drive interest in investing in the London Stock Exchange.

And that filters through and it then encourages new companies to come. And then you've got an interesting product for people rather than something that is being talked down by the press and isn't terribly attractive. Yeah, that's interesting the point you make, that it's not just the macro trends that everyone's experiencing.

There's a big part of regulation that's involved there. And the regulators and the LLC have recognized this, and they're enacting the biggest changes in quite a long time on the exchange. So from sort of an Australian company looking to list on the LLC perspective, what are some of those changes that could greatly assist them? Well, let's look at the different options for exchanges very briefly, and then we can move on to the legislative changes.

And I'll keep it relatively punchy. So you've got what I would call the growth markets are AQUIS and AIM. And when I say growth, I mean generally smaller companies, high growth, probably higher risk, higher reward.

Although there are some established companies on both of them, of course. Then you move on to the main market, which is the larger exchange where all the blue chips are listed. Now, what they're doing with the regulation is mainly focused on the main market, although some of it's going to be important for AIM companies as well.

And they're doing a couple of things. So on the main market, they're simplifying the listing categories. So they'll just be for commercial companies, one category that will have a lower regulatory burden than has historically been the case.

And they're also creating, and this is interesting for some of the ASX companies, they're creating a secondary listing category that will attract companies that want a dual listing. So if your primary listing is on the ASX, then you can get a secondary listing in London and the regulatory burden over and above what you're already used to on the ASX shouldn't be much different. It should be lower.

So that's the first thing. Now, the second thing which is going to be useful is that historically, one of the main problems of the main market here was that you had to issue a prospectus if you issued more than 20% of your share capital in a year. So secondary fundraisings were expensive, possibly, and time consuming for companies listed on the main market.

That didn't apply to AIM, but certainly the main market. They're going to raise that 20%. We don't know what to, this will happen sometime next year.

But it's going to become easier for companies, perhaps in that secondary listing category, to raise money in London without having to issue a prospectus, which in contrast to issuing a prospectus in Australia over here, a prospectus is quite a big document that has to be approved by the regulator and will take you a couple of months to do. So that's a big change. And then the second big change is around involvement of retail investors.

So there will be no prospectus requirements if you're issuing to retail investors, if you're already listed on the London Stock Exchange or on AIM, for example. So that's a good change for AIM. And that means that you can raise money quickly and more easily from your existing shareholder base, including all the retail punters and from new retail punters without any limits on how much you can raise.

And that means you can extend a placing to your existing retail investors, rather than just keeping it to the institutions and allow them to participate on a level playing field, rather than always doing an institutional placing and the little guy misses out. And what that's going to do, I hope, is mean that you've got a lot more retail investors in London Stock Exchange listed companies driving liquidity, which is one of the other criticisms historically that perhaps unfairly of London is that it doesn't have much liquidity. I mean, we can come on to the reasons for that if you like, but I think this is certainly a push in the right direction.

But you're right, there's two elements to this. The government can only do so much. I'm confident they're doing their bit, but investor sentiment needs to be there as well.

And I'm hoping that something like Raspberry Pi and some of the other big fundraisings we've got going on at the moment will help boost that sentiment as well. Yeah, I mean, you've touched on that sort of retail aspect a couple of times now. And that's a really interesting one, because the regulators, what they're trying to do is help shield these investors from losses and things like that.

But the share market is a great mechanism in order to build wealth. And retail investors aren't operating in an equal playing field. So allowing better access, I think, long term would have a lot better results than if they didn't have that access.

And in fact, in Australia, you've got the Sophisticated Investors Test, which is based purely on income and assets. And if you don't pass that test, you can't have access to a lot of more complicated financial products, which generally generate much higher returns, though the risk is there. And so, I mean, from my perspective, I've always wanted to see more of a knowledge-based test in order to earn that status, rather than just if you've got, I think it's $2 million, you can then access these products, because theoretically, you can take the losses.

I don't think that's the right approach. I think we try to inform investors better so they can make more informed decisions and really benefit in the stock market. And I think that raises all boats.

And if you look at the USDA's consultation on this, you see they acknowledge that what they're stripping away when they're creating this new listing category for all commercial companies is what they're stripping away is the investor protections. They're stripping away the rights of shareholders to vote on material transactions, and they're pushing it to a more of a disclosure-based regime. And they're saying that we recognize that investors will now have to do their own due diligence on things, and there will be higher risk for investors potentially in forcing companies to disclose rather than get shareholder approval.

But by reducing the volume of documentation needed, and I think balancing out a little bit better the investor risk versus the regulatory burden, I think they're hitting the right spot, really. And if it doesn't work, look, the FCA has the power to amend the rules in future without having to go back to parliament. So it can be tweaked if it has to be tweaked, but I think at the moment, they've got about the right balance.

Yeah, I think that optionality on tweaking is very prudent as well, because you rarely get it right the first time. So I think there'll be lessons learned over time. But again, overall, I think it's a net positive for the London market.

So we've talked about new regulation and how it would be easier for Australian companies to join the London Stock Exchange. But what would Australian companies need to do in order to be successful once listed? Are you able to point to some examples of that? Sure. Well, I'll make it fairly general as to what sort of companies succeed and which ones don't and why they do and don't.

Australia is a long way away from the UK, and it will be very easy, and I have seen this in the past, for companies to come and list in London and then not really get the most out of their London listing. And then they have concerns because they haven't got sufficient interest in London and then no liquidity, and they just don't get good value. Because look, a listing is an expensive transaction, but it's only really expensive if you don't get the most out of it.

The companies that have succeeded, they end up having to do a lot of work to succeed. They have to come over and see investors. They have to have a presence in the UK, by which I mean not just a non-exec sitting in London, but the key executives coming over, seeing investors, seeing analysts, talking to their advisors, presenting at things like AIS, for example, and getting the message out there.

Because the more you put into it, the more you get out of it. So if you want to create investor interest, if you want to get liquidity, if you want to get a broad range of interesting investors on your register, you've got to wear out a bit of shoe leather. And then if you do that, and it's a success in London, you can amortize the cost of the original listing over the life of your listing, if you like, as opposed to just listing and then expecting it to magically happen.

So the companies that have really succeeded have understood that and have made a lot of effort to get the most out of that listing and use it as a springboard for fundraising, for not just investor interest, but broader consumer interest and just raising the profile of the brand. Yeah, you definitely get out what you put in. And it's not just about releasing your announcements and results and things like that.

You really sort of need to engage. So I think that's very, very good advice on your end. So Bird and Bird are part of the Australian Investment Summit.

Very excited, July 10 at the London Stock Exchange. What are you hoping to see out of the event? Well, look, you and I are already working on a float for one of the companies that's put out its intention to float announcement. So that's great.

Look, I like meeting good companies who want to list in London and want to do other things in London. I'm a big believer in attracting international companies to the UK as a foothold into Europe, as a means to raising money, to make acquisitions, to set up offices, to employ people, all that good stuff. So any opportunity I have to meet overseas companies who are looking to access London in some way is good.

I think you've got a very interesting collection of companies coming over. And from my practice, they hit a lot of the interesting bits that I'm looking at at the moment around clean technology and around more traditional resources. So I think you've got a good stable of companies coming over.

I think you'll have a good bunch of investors and other people in the room to see them. We'll put together some good content for them and show them the town and introduce them to the right people. It's great that you're doing it with the London Stock Exchange.

I work very closely with them on this sort of thing all the time, whether it be here or over in Australia where I'll be in a little bit later in the year, or in Africa or wherever. We do a lot of marketing together and they always produce very good content. In fact, I always encourage any company who are considering doing anything in London to pop by and see the guys at the London Stock Exchange because they've got a vast amount of information and data to really help people make the right decision as to whether London is the place for them.

None of us wants to act on a transaction where the client doesn't end up getting good value out of what they're doing. So I don't want to be listing companies that aren't suitable for London or won't get the most out of it. So this sort of opportunity, this sort of event is a good way for those companies to come and really gather all the data they need to see if London is for them.

And if London's for them, we're very happy to help them. And if London isn't for them, then that's fine. They've got their information and they can make their decision.

So I want to see more of this kind of thing. I want to see more of these delegations coming over both ways and seeing what the respective markets can offer each other. Yeah.

No, no, it should be an exciting day. And you talk about that clean tech side of things. VPC is big on sort of clean tech.

We actively seek out companies in that space. And so H2X Global, hydrogen fuel cell electric vehicles, Constance Iron looking to do magnetite iron ore, which is a much cleaner sort of version for steelmaking. And then we have Wellnex, which is in the wellness space, which is very much helping the health outcomes of consumers.

So I think it's a good mix there and it should be an exciting day. So I encourage anyone who hasn't already registered, tickets are running out, but please it is complimentary. So please head to the Australian Investment Summit website in order to secure your place and to come along and to meet Michael and myself.

Thank you so much for your time, Michael. Really appreciate this conversation. Thanks for having me, Jack, and look forward to seeing you again at the AIS in early July.

To learn more about the Australian Investment Summit, please click the link in the description below.