Jeremy Hunt said that the UK could create a $1tn domestic tech giant to compete with Microsoft or Google. He dismissed foreign bids on London-listed companies, saying they were “part of capitalism”.
The chancellor is leading a regulatory revamp to make it easier to start-ups access funding to fuel their growth, and to stem the outflow of capital from UK equity fund.
What’s your yardstick for success? Hunt said: “I’d love to see British Alphabet and British Microsoft.”
“It may not be for another decade.” But I would like to see an indigenous company with a [market] capitalization of a trillion dollars, and a global presence. . . This would be my goal for the UK to become the next Silicon Valley. “It’s a dream big, but I believe we can achieve it,” he told an interviewer.
A company worth $1tn (£800bn), however, would be dwarfed by London’s richest companies. Apple’s $2.9tn value alone is greater than the FTSE 100 at £2tn.
In 2016, SoftBank, the Japanese company that bought the UK’s largest tech company, Arm, a chip designer, was welcomed by Theresa May, the then prime minister. When it returned to London’s public market, the company chose New York instead.
The FTSE 100 has been a popular listing in the UK for many years. However, in recent years the FTSE100 has seen a number of companies abandon it in favor of primary listings on the US market.
Hunt’s goal of creating global companies in Britain will likely be part of his pitch when he hosts Thursday a summit for tech chief executives on Dorneywood, Buckinghamshire’s estate of the chancellor.
He said it wasn’t too late for Britain to build tech giants as large as US giants. “There is absolutely no reason why we can’t have tech giants who are UK born and raised, but grow to global dominance via the UK capital market.”
His reforms include a revamp of the UK listing rules. He also loosens restrictions on dual class share structures, which are favoured by founders who want to retain control after a company has been listed.
Investors have expressed concern that the proposals could undermine Britain’s reputation as a centre of corporate governance, and damage its appeal as a financial center.
Hunt dismissed concerns about a spate of takeover offers for UK companies, which were sparked by a lacklustre stock price.
Hunt stated that “big companies going public and then privatizing is how capitalism works.” “And very often,” Hunt said. . . A well-run private investment company can transform a business in four to five years. It shouldn’t concern us in the slightest if this is happening to some of Britain’s great companies.
According to Dealogic, the value of bids on London-listed companies has reached its highestsince 2018. Most of these are from foreign buyers who take advantage of low valuations.
US private equity firm Thoma Bravo agreed to purchase cyber security company Darktrace for £4.3bn. FTSE 100 mining giant Anglo American, and International Distributions Services (owner of Royal Mail) are also foreign targets.
Hunt said: “I want to ensure that Darktrace can be valued at the same level as Amazon, Google, or Microsoft in the UK.”
He cited Sir Demis Hassabis’ decision to sell DeepMind to Google, the UK artificial-intelligence lab in 2014. Mustafa Suleyman said that last year, Hassabis co-founder Mustafa Suleyman said the UK should “encourage large-scale investment, encourage risk-taking”.
Hunt said: “I’m going to ensure that future Demises are confident they can raise capital in London and remain independent, so that the UK eventually gets these giant tech players.”
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