The latest index review by FTSE Russell, part of the London Stock Exchange Group (LSE), sees cybersecurity firm Darktrace (DARK) relegated from the top flight less than two months after it was promoted due to the de-listing of supermarket group Wm Morrison following its acquisition by private equity.
Darktrace shares have had a rollercoaster ride since the firm’s hotly-anticipated initial public offering at the end of April at 250p and its elevation to the FTSE 100 in October. From a high of almost £10, the stock is down more than 50% to 464p today.
Also exiting the premier index after 19 years is chemicals group Johnson Matthey (JMAT) following a near-20% slide in its share price last month on the news that it was abandoning its attempt to compete in the battery technology sector due to the poor economics of the business.
In their place, veterinary medicine maker and ‘lockdown winner’ Dechra Pharmaceuticals (DPH) and industrial products maker Electrocomponents (ECM) are promoted. The changes take place at the close of business on 17 December and become effective from 20 December.
In the FTSE 250 mid-cap index, newly-listed investment company Petershill Partners (PHLL) and financial group Provident Financial (PFG) replace electricals retailer AO World (AO.) and hospitality firm Restaurant Group (RTN).
At the same time, the Financial Conduct Authority has introduced new rules for companies wanting to list in London in an attempt to increase the UK’s prospects as a venue of choice. According to the UK Listing Review, between 2015 and 2020 London only accounted for 5% of the global IPO market.
As of tomorrow, firms will be allowed to list with a dual class structure within the premium listing segment in order to 'encourage innovative, often founder-led companies onto public markets sooner and so broaden the listed investment landscape for investors in the UK’.
The free float, or amount of shares an issuer is required to have in public hands, will be reduced from 25% to just 10%, ‘reducing potential barriers for issuers created by current requirements’ according to the regulator.
Lastly, the minimum market capitalization threshold for both the premium and standard listing segments of the market will rise from £700,000 to £30 million so as to give investors ‘greater trust and clarity about the types of company with shares admitted to different markets’.
The FCA’s director of market oversight Clare Cole said the changes were designed ‘to meet the needs of an evolving marketplace, helping support the new types of companies seeking the investment that drives economic growth and by giving investors more choice with appropriate protection’.