VC firm Forward Partners joined AIM, raising £37m raise against a £151m valuation. The tech specialist, which presciently included Cazoo and Breedr in its portfolio, heralded the listing as an exercise in democratising retail investors’ access to start-ups. 

Online classified ad portal Baltic Classifieds chose London for its £101m raise, achieving a £1bn valuation. Eastern European floats have raised $5.7bn this year on western exchanges according to Bloomberg, showing a preference to their domestic exchanges which have raised $4bn.

In July,  London welcomed their first direct listing of a tech firm, which achieved a valuation of over £8bn. Wise was launched in 2011 when two Estonian businessmen got annoyed at cost of sending money between their country and the UK. The company was formerly known as TransferWise, with the suffix now dropped to signal a growing range of services for its 10 million-strong customer base.

Cosmetic retailer Revolution Beauty achieved an impressive £510m valuation in its £111m AIM listing. With strategic use of social media influencers, the company has forged ties with major high street and online brands on both sides of the Atlantic and doubled revenues in every of the seven years since its foundation. 

The first half of the year got off to a flying start, with Brexit and COVID concerns beginning to ease. During Q3, we began to see momentum slow as we entered the summer period. Market volatility spurred on by supply chain issues, inflation concerns, and general subdued optimism about economic recovery impacted the latter part of the quarter.

Given these concerns, alongside potential investor saturation from last year's IPO backlog, some companies are reassessing their timing. As we enter the year's final quarter, our thinking at EQ is that IPO activity will fall more in line with historical levels.
Robin Walker, Business Development Director, EQ

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China Telecom
In August, raised

China Three Gorges Corp
raised

Challenging Board Composition
Questions on Board composition rose to prevalence after the 2008 crash. Although the Companies Act refers to the benefit of diversity to companies and the wider community, the main impetus has come from the independent audit and accountancy regulator, The Financial Reporting Council (FRC).

Its first guidance on boards and their governance responsibilities in 2010 emphasised more rigorous risk management and aligning executive pay to long-term goals. But another new objective was greater board diversity to encourage debate and help avoid group think.

Diversifying Diversity
In announcing their first set of principles, the only area of diversification the FRC specifically referenced was gender.

However, listed companies soon came under pressure to achieve balance on more than just gender. The FRC has identified difficulties for openly gay candidates in getting board positions. The regulator has now issued guidance to ensure companies engage with LGBTQ+ staff and monitor progress, while encouraging greater coverage of the issue in annual reports. 

A further target of one ethnic minority director per FTSE 100 board by 2021 has not been met, prompting the FCA to introduce its own measures. For the moment it is providing benchmarks rather than quotas and tackling the problem from a transparency perspective, with listed companies now expected to publish diversity information in a standardised format.

Age Diversity in the Boardroom

FTSE and AIM directors have an average age of 56 and 57 respectively

An obvious obstacle that youth has always needed to overcome is that they will often not have achieved the gravitas (and the board seats) that usually only comes with experience and time spent in a profession or industry.

Yet, aside from bringing in fresh perspective, millennials make up a hard-to-ignore 35% of the workforce. There is also a general acceptance that the digital nativity of younger directors adds crucial insights around the boardroom.

Class Ceiling
Socio-economic background is also now coming up on the rails as a criterion of diversity.

7% of the population were privately educated but account for 48% of FTSE 350 chief executives.

The 2010 Equality Act left out socio-economic status in part because of a problem with definition. Nonetheless, twenty European countries and Australia have all legislated against social origin discrimination and KPMG recently garnered headlines for setting itself a target of 29% working class directors and partners by the end of the decade.

Diversion Tactics
With emerging evidence of its economic benefit and the pressure to be on the right side of history and regulators, boards are moving towards diversity, but not necessarily the same diversity. According to the FRC’s 2021 survey, 34% of directors rated personality as the diversity factor that contributes most to boardroom effectiveness while gender and ethnicity were held to be most important by only 6%.

Competing diversity objectives do not always lead to more diversity, sometimes just a different version of diversity. FRC research suggests, for example, that in order to meet targets in female board positions, working class men (not the subject of any targets - yet) are being ousted. Rather forlornly, the regulator noted, “We have to ask the question whether we are replacing one under-represented group with another”.

Practice and Theory
The practical implementation of diversity is therefore underway in listed company boardrooms, even as the theory, definitions and metrics are still being debated. As diversity beds in, there will be better information on how it has translated into improved profitability. Meanwhile, the hope and expectation is for a healthier corporate culture in which directors more closely reflect their employee and customer bases and make decisions that are better attuned to both.

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