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.

Thom Abbott, Head of South East Asia, Primary Markets at the London Stock Exchange takes the mic to discuss the benefits of listing in London and the international investors active through the UK’s capital markets.

We explore how they are setting the stage for companies who are ready for global growth.

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

Read the Conversation:

Welcome, my name's Jack Colreavy, Associate Director for the Corporate Finance Team at
Barclay Pierce Capital, and today I'm hosting on behalf of the Australian Investment
Summit, an organisation focused on facilitating capital access to global companies
through various channels. Particularly, we are hosting an event in conjunction with the
London Stock Exchange on July 10th in London, and joining me today is a representative
from the London Stock Exchange, Thom Abbott. Welcome, Thom.

Hi, Jack. Great to be here. Thanks for having me.

Great that you could make it. Thanks for your time. Let's quickly start off with you. You're the Head of Southeast Asia for Primary Markets for the LSE. Can you just explain what you do and what the LSE is as well?

Thanks, Jack. Yeah, of course. So that's right, I work for the LSE, the London Stock Exchange itself, predominantly speaking to companies, advisors, as well as their investors about what a listing in London might look like. Some people might think it's a bit strange that I'm sat here in Singapore
and get to travel around the region, meeting companies in Australia, right up the way
through to Korea, as well as here in Southeast Asia. But as an exchange, we have over
300 years of history, and a lot of that has been providing capital to companies
internationally and for companies to raise capital to go international. We have around about 40% of the companies listed in London are actually international companies in nature. For Australia, that's just over 40 of those at the moment of the about 2000 companies that we have in London from Australia. So, you know, great opportunity to meet companies. And we have to share our message wherever we go. And sometimes, you know, it takes partnering with an organization such as yours with BPC and AIS to make sure that we can share that message and make sure that a lot of the information that's needed to be understood about a listing in London, it gets to the right people. And so we're really excited to partner with you guys for the AIS to help both the investors and the advisor community in London understand Australian businesses, but also Australian businesses
understand what a listing in London might take.

Yeah, I mean, I'm very excited about the event. And I think there's a lot of value to
companies and to investors who will attend. Over 2000 companies and 40% of foreign
global companies, that's a huge and diverse market. What do you think attracts so many different companies and investors to participate in the London Stock Exchange? I think for the companies themselves, I think there is that strong investor base and willingness to look at international companies. I think even if you look at the FTSE 100, our largest 100 businesses, although a lot of them might have had their roots in the UK, if you look at their revenues, over 75% of it is coming from across the whole world and internationally. And so we're very international market in
nature.

I mean, you're right, it doesn't just reflect the companies, but also the investor base
itself. Why is that? I think maybe in part due to time zone. As the market opens in
London, there's still a few hours of the day left of the working day here in East Asia,
where you get some of that flow.

And you also see as the market sort of getting to the close in the UK, the US market is
just opening up. So I think London's strong position as a financial centre has always been
in part opened by that, helped by that. And it's reflected in the numbers.

If you look at the average book of an IPO in London is made up of 30% to 40% of US
investors, another 30% to 40% across Europe and the UK, and then a growing
percentage, actually, since I joined the exchange of rest of world, which is East Asian,
Middle Eastern and Australian investors as well. So really, global in nature, both in terms
of the companies, but also those investors. Yeah, I mean, from my perspective, we have
a number of clients looking at listing on the LSE or looking at doing a dual listing.
And from their perspective, they very much have a link to the region, whether they want
to grow into those markets, whether they already have existing customers there. And
from a mining perspective, it's really interesting because ASX is a very heavy mining
focused exchange. So it seems like the best place to list a mining asset, particularly an
Australian mine. But it can get quite crowded. And so we look at the LSE as a venue where you can attract a broader range of investors. But then also, you're not sort of lumped in with 500
other companies looking to explore gold or looking to produce iron ore.

So there's that sort of aspect from our perspective. But very much, we tell our clients, it's
not for everyone. And we only really recommend it where it makes sense.

But I think that's a good segue for the ASX is very much seen as a mining exchange.
NASDAQ is well known as being very tech focused exchange. Are there any particular
sectors that the LLC is over indexed on? Or is it very much just a broad diversified
marketplace? That's a good question.

I think overall, we're a pretty broad diversified market. There's definite strengths within
the financial and banking sector. Mining and energy have also always done quite well.
But actually, even if you look at our tech sector, we've had over 50 tech IPOs in the past
three years. I think certain sectors that do quite well, where there's potentially more
depth and a better understanding, we've seen a real resurgence in sustainability-focused
companies. We're just partly in thanks to things such as TCFD reporting and some of
those sustainability requirements being really well understood amongst investors.
If that's part of your story, I think it's something that can get a real following over here in
London. But overall, a very much diversified market with most sectors covered in some
way or another. I mean, we talked about diversity in terms of sectors, but there is also a
broad range of market caps from multi-billion to single million.

The LSE isn't just sort of one market. Can you talk about the different segments of the
LSE and their respective advantages for these companies? Sure. As you say, we've
always been quite a broad church in terms of market cap spectrum.

We've actually been looking to do more in the private company space as well, which we
could talk about another day perhaps. But if you look at our two traditional main markets, we've got AIM, which is our growth market, which is typically for slightly smaller companies. As you say, it's even sometimes those single million digit valued companies. But also, it's a market with a slightly simpler set of rules, slightly easier to get listed and have those eligibility. And around certain corporate governance requirements, there's not a strict adherence to UK corporate governance code, but rather using the QCA. So easier to be a bit more nimble and a bit easier for companies to be able to get listed on AIM at a slightly smaller scale.

But that's not to say that those companies can't then grow on that market. And we've
seen companies scale up from being in the low tens of millions into the half billion,
billion, etc. The other market that we have is the main market, where we typically see
companies that around the, not that it's only based on this, but around the 500 million
pounds market cap and above sort of range that start to consider that, mainly due to the
ability to have index inclusion.

And we're actually going through quite a few major changes to the rules for the main
market to actually increase the flexibility there as well. Yeah, let's move into that. So the
LSE in conjunction with the FCA, which is the financial regulator, recently reviewed
regulations and listing rules and things of that sort of nature.

So let's talk about some of these changes that are, some of these proposed changes that
are set to come in and what are the benefits to the companies listed on the LSE? Sure.
As you say, we've been going through quite a long review process with not just the FCA,
but a lot of stakeholders across the market and an understanding of in a world where
there's questions about de-equitization and how public markets are doing. Actually, how
can we ensure that London and the UK remains competitive and we still remain the most
international and one of the largest globally? How that's now coming to fruition is we're
in quite an exciting period.

First, I think we'll really see in summer 2024, so this year, we'll see the UK, some of that
is, we'll see the new listing rules for our main market. So where we used to have a
standard listing, which was based on old EU regulation and a premium listing, which had
a slightly higher level of disclosure than those EU-based rules and super disclosure
needed around certain aspects. We're actually going to a much simpler single segment
for equity companies, which will, in effect, it'll be simpler, more flexible and disclosurebased.
I think that's sort of the key way of thinking about it. Where previously it was a bit more
rule-laden around things like related party transactions, the three-year track record you
used to have and other requirements. This will be much more about disclosing to the
market exactly where you're at and make it much easier to then get to market.

The other big change is you'll need to be guided on the market by a sponsor, but the
situations where you'll need that sponsor will be far fewer. Again, it'll be much simpler
and easier to understand. One thing I think that's relevant potentially to some of your
clients in Australia is alongside this single segment is we'll have a new international
secondary listing segment as well, which will be much more based upon home rules and
more similar to the old standard, but much easier to actually be listed, take a secondary
listing in London and much more straightforward to do.

Yeah. It sounds like a pretty major overhaul. Are other exchanges doing this or are you
guys at the forefront of this? I think certainly in terms of developed markets, I think this
is the greatest changes that you'll see happening currently.

I'm sure there's other consultations and so on out there, but yeah, this really is the
greatest change that we've seen in the last 40 years. We hope that it'll put us slightly
ahead of the curve again in terms of enabling companies to have that slightly greater
flexibility and still benefit from what is still the leading market in Europe by some
distance. Year to date, we're third in terms of equity capital raised globally, only behind
the US and Indian exchanges.

Then if you look at other aspects such as liquidity and so on, we're actually on a free flow
percentage more liquid than the US markets when you look at our major indices. Then
again, valuation, look, this is very much driven by companies themselves and their own
growth profile. There's a lot of research out there at the moment that shows that London
has just as many companies trading at a premium than other markets.

I think coupled with those facts and the strengths of London as it stands, alongside these
rules that bring that greater flexibility and transparency, it's a really exciting moment.
Yeah, it sounds great. I mean, the LSE along with a lot of other international exchanges
have gone through a lot of sort of trials and tribulations particularly over the last few
years.

It's important that regulators and marketplaces are acknowledging the issues and
they're taking positive steps to address them. What I see these changes being is making
it more streamlined, quicker and cheaper for companies to access the market and allow
investors and companies to meet and to exchange capital. It's really exciting.
I think we'll wrap it up there. Thank you so much for your time, Thom. I'm really excited
for the AIS event, July 10 in London.

We'll be hosting it at the London Stock Exchange headquarters. Thank you so much for
your time. To learn more about the AIS as a company or to attend as an investor, please
click the link in the description.