London Tunnels’ Shift Signals Broader Trends in Private Market Access
The recent decision by The London Tunnels Ltd to move from Euronext to JP Jenkins highlights a growing trend among companies seeking alternative routes to public markets. Faced with challenges related to share trading and liquidity, the firm’s shift underscores the evolving landscape of private and public capital access.
The Allure of Private Securities Venues
JP Jenkins, a private securities venue, is gaining traction as an alternative for companies finding traditional stock exchanges costly or restrictive. This move isn’t isolated. Companies are increasingly evaluating the benefits of platforms offering potentially lower fees and different regulatory requirements.
“Companies are finding it very expensive to be on the London Stock Exchange or on Aim,” stated Angus Murray, chief executive of The London Tunnels, in City AM. He also pointed to lower-than-expected liquidity as a key driver behind the decision.
Declining Retail Investor Enthusiasm
Murray’s comments touch on a broader issue: waning retail investor participation in UK stock markets. A perceived lack of enthusiasm from individual investors is impacting liquidity and prompting companies to explore alternative funding models. This trend is particularly noticeable when compared to other jurisdictions where direct stock market investment remains popular.
The Cost of Compliance and Liquidity Concerns
The London Tunnels’ initial foray onto the Dutch exchange was hampered by complications with tax treatment, leading to its shares being dropped from major trading platforms. This illustrates the complexities companies face when navigating international stock exchanges and the importance of considering all potential regulatory hurdles.
The £80m funding shortfall for the tunnel conversion project further emphasizes the challenges in securing capital, even with a unique and potentially lucrative attraction. The company plans to pursue debt financing, targeting investors in Asia and the Middle East, demonstrating a diversification of funding sources.
The Kingsway Exchange Tunnels: A Unique Project
The Kingsway Exchange tunnels, steeped in history as a former MI6 base, represent a significant undertaking. The planned conversion into a high-tech immersive experience, complete with advanced visual and acoustic technology, aims to attract up to two million visitors annually. The project’s success could set a precedent for similar ventures leveraging historical sites for tourism.
Future Trends: A Fragmented Market?
The London Tunnels’ experience suggests a potential fragmentation of the public markets. Companies may increasingly opt for a mix of funding sources, including private venues, debt financing, and international investors. This could lead to a more diverse, but potentially less transparent, capital landscape.
Veronika Oswald, Commercial Director at JP Jenkins, believes the move validates the infrastructure they’ve built and highlights the continued importance of a London trading presence for growth companies.
FAQ
What is JP Jenkins?
JP Jenkins is a private securities venue offering an alternative to traditional stock exchanges.
Why did The London Tunnels move from Euronext?
The company cited complications with tax treatment and resulting lack of trading platform support as key reasons for the move.
What are the Kingsway Exchange tunnels?
The Kingsway Exchange tunnels are a network of WWII-era tunnels beneath London, formerly used by MI6.
Pro Tip: When considering funding options, companies should carefully weigh the costs and benefits of each venue, including regulatory requirements, liquidity potential, and investor access.
Do you suppose alternative trading venues will become more popular? Share your thoughts in the comments below!
