Nine of the largest pension managers in the UK have voiced their concerns about the regulator’s proposed listing rules.
The group including Railpen collectively manage around £300bn assets under management on behalf of 22 million members.
They have responded to the Financial Conduct Authority’s consultation about equity listing rule reforms in a letter.
The consultation is part of the UK’s attempt to shake up the City of London and make it more globally competitive.
It has sparked a debate about whether the country’s listings regime is satisfactory or needs to be overhauled.
In the letter, the schemes said the FCA’s proposals would:
- Roll back fundamental investor protections, such as the right to a shareholder vote on both significant and related party transactions, as well as the equal voting rights that serve as the foundation of a fair and democratic capitalist system.
- In turn, this would dilute investors’ ability to act as robust stewards of members’ assets
- And ultimately diminish the UK’s reputation as the world’s leading ‘quality’ market and its role as a beacon for high corporate governance standards
They added individual schemes’ discussions with companies, IPO advisers, and investment managers, found what innovative companies want.
These are fair valuations, a stable political environment and a deep, liquid pool of international capital.
The letter said that policymakers should pause their current proposals and seek to implement other, evidence-led measures to address these fundamental issues.
Railpen head of investment risk and sustainable ownership Michael Marshall said: “We’re supportive of a public debate on the UK capital markets and are keen to ensure our market thrives whilst maintaining the robust quality the UK is known for. The FCA’s current proposals risk watering down that quality and reducing the pool of institutional and retail investors willing to invest in UK-listed companies.
“We welcome the opportunity to share ideas and discuss evidence-based approaches which could boost the UK’s appeal without diluting investor protections.”
Letter signatories include:
- Railpen
- Brightwell
- Brunel Pensions Partnership
- The Church of England Pensions Board
- HSBC Bank (UK) Pension Scheme
- Merseyside Pension Fund
- NEST
- People’s Partnership
- TPT Retirement Solutions
- Universities Superannuation Scheme (USS)
Caroline Escott, senior investment manager, at Railpen, added: “As UK pension schemes, we naturally want to see the UK continue to thrive as a global financial centre.
“Pre-IPO companies and advisers, as well as available academic evidence, tell us fair valuation issues are a key challenge. Such valuations are driven by a large volume of liquid, high quality institutional and retail investor capital – volumes which come in turn from investor confidence in the protections they are given as well as policy, political and economic stability.
“Proponents of a more relaxed UK approach to shareholder rights underestimate the extent to which investor-friendly corporate governance standards have shaped the UK’s attractiveness on the world stage. We look forward to a broad discussion which considers voices from across the entire capital markets ecosystem.”
Yesterday (27 June) chancellor Jeremy Hunt signed a financial services agreement with the European Union in Brussels.
It was the first visit from a chancellor in over three years and aims to improve ties with the bloc post-Brexit.
