​Welcome to Computershare's Advisor Newsletter, bringing you highlights from the registry world. In this newsletter we bring you an update on the IPO market, a brief review of our activities in 2018, a review of the recent AIM Rule changes and a brief update on the implications of Brexit on settlement in CREST.​

This month we will cover:

 

2018 IPO performance

Throughout 2018, the UK IPO market remained buoyant with 88 new listings by the year end - which represented over £20 billion in market value, even though Q3 saw a decline of 44% of new listings when compared to the same time in 2017. Of the 88, Computershare supported 34 of the listings that took place (39%) and we welcomed both the first and last listings for 2018; AIQ Ltd and PetroTal Corporation respectively. Other new clients joining us during the year included Tritax Eurobox, JTC, Energean Oil & Gas, Cake Box Holdings, Hipgnosis Songs Fund, Jadestone Energy and Manolete Partners.

Despite the uncertainty surrounding the UK's exit from the European Union, financial services brought the largest number of new listings during this period. UK markets saw a steady stream of listings, as the LSE's main market and AIM exchanges secured 10th place in the top global exchanges for listings by volume and proceeds in quarter 3; this was on top of London being ranked fourth by volume of cross-border IPOs in 2018.

Computershare remains the registrar of choice for new listings across the globe, and the UK's industry leading registrar* whether it is for complex cross-border listings and corporate transactions or more straight forward single domestic listings.

*Leading registrar - 2018 Capital Analytics Benchmarking survey; Winner – Governance Award of the Year and Risk and Compliance Award, 2018 ICSA Jersey Awards; Best Share Registrar, 2018 UK Stock Market Awards; Best Share Registrar, 2018 Shares Awards.

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Global Capital Markets

Despite the challenging market and political backdrop, the 2018 calendar year proved to be an equally busy year for our Global Capital Markets team with a number of high profile, complex and cross-border transactions, such as:

  • Spotify's US listing (April)
  • the complex spin-off and merger between Westfield (Australia) and Unibail-Rodamco (France/Netherlands)
  • the direct listing of shares in the US for UK and Irish PLC companies without the need for using an ADR which included Gates Industrial Corp, Sensata Technologies, nVent Electric, Iterum Therapeutics, Cushman & Wakefield, Osmotica Pharma
  • the merger of Linde AG with Praxair Inc to form a new dual listed (US and Germany) Irish PLC in October

 

​In total, we received 165 enquiries during the year, which spanned transactions involving 26 unique jurisdictions. 

In addition to advising and managing corporate transactions, our dedicated Global Transactions team received nearly 20,000 cross-border transactions requests (to move securities between different markets) during the same period. On average, the monthly value of securities handled was in excess of USD$4 billion, further demonstrating the importance of our unique global registry services and international market connectivity. 

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Channel Islands

2018 has been a positive year for the Computershare Channel Islands and a year in which we saw a steady flow of new business, with Guernsey being particularly favourable. Three Guernsey Investment Fund IPOs successfully listed during 2018, despite the prevailing market conditions and the pipeline for Guernsey and Jersey IPOs remains strong as we head into 2019.

Of particular note is the number of British Virgin Islands/Cayman/Bermuda re-domiciles to both Jersey and Guernsey. The current trend for many companies/Funds choosing to re-domicile to Jersey and Guernsey is to take advantage of the flexible legislation and strong regulations in these jurisdictions which enable them to benefit from improved protections as the entities will fall within the remit of the UK Takeover Code. At the same time, they have a well-established infrastructure with a robust regulatory and compliant regime.

2018 also saw the acquisition of four new clients from our competitors, with a further two transfers just completed in early February.

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Brexit

At the end of last year Euronext, in light of the earlier European Commission communication on a 'no deal' contingency, provided an update to key market stakeholders (the Irish User Committee) on the hard Brexit no-deal service continuity planning:

1. Short term – no-deal service continuity (Hard Brexit)

The draft legislation provides temporary equivalence for a two-year period from March 2019 and permits the continued use of CREST during that time, removing the immediate risk facing the issuer community.

2. Long term solution to finalise Euroclear Bank's operating model for settlement of corporate securities in Ireland

Euronext has selected Euroclear Bank as its preferred partner for the delivery of a long-term CSD solution for the Irish market. The Euroclear Bank solution will be Eurozone based, offer multi-currency settlement and continued access for international investors, and also has an existing cross-border link with CREST. 

Euronext and Euroclear have established a Steering Board for strategic guidance and a Working Group comprising of market representatives. A White Paper will be published in due course.

In our view, if implemented, the proposed Commission solution will act to ensure that the current settlement services for Irish equities and ETFs continue beyond Brexit.

The interim period post-Brexit allows market stakeholders to work through the proposed governance framework to review and establish secure and robust arrangements for Irish securities in the medium to longer term.

Computershare will continue to actively engage with key stakeholders, issuers and market infrastructure organisations in the UK and Ireland, and like many businesses is monitoring the progress of the Brexit negotiations. Regardless of the outcome Computershare's global footprint, with offices throughout Europe, leaves us well placed to respond to any consequences from the UK's exit from the EU.

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Good news on our latest acquisition: Computershare welcomes Equatex to the group

On 12 November we completed our acquisition of Equatex, a Zurich-based specialist in deferred equity compensation plans. With 160 clients, predominantly in Switzerland, Germany and the Nordics, Equatex serve more than 1.1 million plan participants in 168 countries and administer around USD$ 40 billion in assets.

We are excited by the opportunities that lie ahead as we welcome Equatex to the group. The acquisition brings some compelling additions to our product toolkit, and the opportunities this will create to enhance the customer experience for our clients and their employee participants.

The market announcement can be found here.

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Best Registrar award

We were recently the proud recipients of the ‘Best Share Registrar’ award at the Share Awards 2018. It’s voted for by readers of Shares Magazine, which shows we’re giving a great service to our clients’ shareholders.

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New obligations regarding AIM Rule 26

Following the changes to the AIM rules in 2018, there was a rush to meet the deadline to clearly indicate which corporate governance code companies wished to adhere to, and to enhance their governance statements to show where they may be deviating from their chosen code.

Unsurprisingly most seem to have adopted the Quoted Companies Alliance (QCA) code, due to it being less prescriptive than the FRC's UK Corporate Governance Code (the Code). Having reviewed the top 250 AIM listed companies 81% have adopted the QCA code, compared to 15% who have adopted the Code and 4% who have adopted a different code such as that published by the Association of Investment Companies, the AIC Code of Corporate Governance.

Those advising companies that have adopted the Code need to be mindful that the revised Corporate Governance Code (found here) was effective from 1 January 2019 and so they may need to ensure their governance statements are reflective of the new version.   

The FRC has published a frequently asked questions (FAQs) paper in relation to the new Corporate Governance code.

The FAQs include:

  • Reporting on Principles

The Code requires companies to state how they have applied the principles in a manner that enables stakeholders to conduct a clear evaluation. The FAQs state that this will involve reporting on how the board set the 'purpose and strategy' of the company, met objectives and achieved outcomes through its decisions.

  • Non-Executive Tenure and the Chair

While there is no set tenure for non-executive directors, the nine years detailed in Provision 10 continues to act as a recommended tenure period. The FAQs explain that Provision 19, which covers the Chair's tenure of nine years from their first appointment, should include careful consideration after completion of the nine year period, and if extended beyond this period a comprehensive explanation should be provided to stakeholders.

  • Conflicts of Interest

The FAQs make clear that Provision 7 is designed to emphasise the collective responsibility of the board in dealing with conflicts in a transparent way.

The FRC FAQs can be found here, and the FRC's 2018 Code is located here.

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Download our IPO brochure

We unveiled our new brochure at the LSE’s IPO Forum in November. Please click here to download a copy. 

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Get in touch

If you have any questions or would like to discuss a corporate transaction, we would be happy to hear from you.

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