The ICAP Securities & Derivatives Exchange (ISDX) has launched new admissions criteria for companies wanting to apply for admission to the ISDX Growth Market.
The ISDX Growth Market is a venue for small and medium sized companies seeking to raise growth capital, achieve an independent market valuation and enhance their corporate profile.
The move is the result of a thorough review of the business following the exchange’s acquisition by ICAP in June 2012 and a public consultation process on the proposed amendments which began in April 2013.
Under the new rules, entrepreneurial companies typically seeking access to equity capital of between GBP150,000 and GBP5m will be able to apply for admission to the ISDX Growth Market if they can meet clearly defined suitability criteria. Companies already admitted to trading will be given 18 months to demonstrate that they comply with the new rules.
This is the first move in a long-term strategy by ISDX to encourage investment back into small and mid-cap UK companies and help close the equity gap – the difficulty faced by many SMEs in raising growth capital during a key funding stage in their development.
The new criteria make enhanced regulatory provision so companies seeking admission to the ISDX Growth Market can demonstrate greater suitability for being traded on a public market and are ready for investment. By implementing these clear standards, ISDX seeks to generate investor confidence in a company’s ability to deliver shareholder returns and encourage liquidity.
The criteria for entry are prescriptive and clear and include reference to a company’s trading history, revenues, profitability and balance sheet assets. To support liquidity, the number of shares available to new investors (free float) will also be used as a measure of suitability for admission.
Companies seeking admission to the ISDX Growth Market will be required to attain a minimum score when assessed against the suitability criteria. The criteria are sufficiently flexible to attract a broad spectrum of companies with different attributes.
Alongside this, ISDX has introduced new requirements around investment vehicles, corporate governance and disclosure, and a new framework for the role of an authorised ISDX corporate adviser. The adviser is responsible for providing guidance to companies traded on the ISDX Growth Market, ensuring that high standards are maintained on the market.
Seth Johnson, chief executive of the ICAP Securities & Derivatives Exchange, says: “Our goal at ISDX is to deliver a market with high standards, where early stage companies from a broad spectrum of sectors can demonstrate that they are ‘investment ready’ and can access the capital they need to grow. The launch of the new rules and the framework for advisers is a practical, constructive development, which will provide a clear set of ground rules for participants. We are committed to supporting and expanding ISDX to allow companies wider access to capital to finance their businesses and their growth ambitions.”