UK City watchdog to make it easier for businesses to raise capital

The UK City watchdog, the Financial Conduct Authority (FCA), is stripping back its rules to make it easier for smaller businesses to raise capital.

As part of this, the regulator has set up a new platform for public offers (POP) to make it easier for growth companies to get the investment they need, as well as increase opportunities for investors.

It will enable companies to make larger offers of shares or bonds without a lengthy prospectus, above £5m. Offers will be made available to a broad investor base outside of public markets via an authorised firm.

“We seek to support growth by encouraging larger off market capital raisings in a way which supports the FCA’s consumer protection and market integrity objectives,” the FCA said in a policy statement, published today.

“In particular, the POP regime will allow companies that already raise smaller funding amounts on investment-based crowdfunding platforms to broaden their access to available pools of capital.”

Bruce Davis, hair of the UK Crowdfunding Association told Alternative Credit Investor that this marks “the start of an exciting new chapter for UK Crowdfunding to open up a broader range of private market opportunities for retail investors”.

“We welcome the approach adopted by the FCA following its extensive consultations with industry to create a balanced set of proposals which support the UK drive for growth,” he said.

“We also note that there is more work to be done to review the impact of changes to the rules for high risk investments and the development of secondary market innovations to support the growth of the POP platforms.”

The latest move comes as the UK government is pushing for more of retail investors’ money to be invested into private markets, recently announcing it may force some pension schemes to allocate at least 10 per cent to private markets by 2030.