15.02.2021

Can a simple visa save EU workers within the UK fintech industry?

A report by former Worldpay boss, Ron Kalifa shows that the UK’s position as a financial technology hub is at risk due to the uncertainty brought about by Brexit and growing competition. As it stands the UK has been at the leading end of innovation in recent times with the sector worth a staggering £11bn in revenue and represents 10% of the global market.

In a move to combat the issue of top talent being deterred from moving to the UK which could arise from Brexit, the Kalifa report calls for a tech worker visa, something which the industry had been lobbying for since the referendum in 2016.  
The proposed tech worker visa has been largely welcomed by the fintech industry and it’s widely hoped that the UK can not only retain top fintech talent but attract new assets. 

The report states “Brexit gives Paris, Berlin and other European fintech hubs a window to capitalise on uncertain messaging. In order to sustain its global dominance in fintech, the UK needs to strengthen its position on immigration or risk a significant shortage in human capital,”

With foreign workers representing 42% of UK fintech workers and EU members making up 28% of these, fintech companies now need to road map a system for their EU talent.

The report also sets out recommendations to encourage fintechs to list in London ahead of a separate review led by Lord Hill. Whilst signs point to activity in London’s IPO market picking up, of the 3,787 IPOs at the world’s major stock exchanges between 2015 and 2020, the US accounted for 39 per cent (on Nasdaq and the NYSE), while the UK trailed with 4.5 per cent.

Kalifa has called for free float requirements on the stock exchange’s premium segment to be reduced from 25 per cent to 10 per cent for a limited time post-IPO in a bid to increase activity and encourage more fintechs into London.

Kalifa also suggests dual-class share structures would allow founders maintain greater control of their companies after listing. 

Delingpole calls this recommendation “a bit of a storm in a teacup” instead calling for more focus on the ‘change of control’ rules “which are a prohibitive force when it comes to going public”.

These rules make it harder for special-acquisition vehicles (Spacs) which have seen a boom in popularity in the US, to list in the UK. 

The blank-cheque vehicles are created to raise capital through a public listing with the purpose of acquiring an existing company. Once the target is bought, that business takes over the listing and begins life as a public company. 

When a reverse takeover happens in the UK trading is automatically suspended. “This is a very real prohibitive factor when it comes to listing companies in the UK, and needs to change,” Delingpole said. 
We’re second only to the US when it comes to fintech investment and this review will only strengthen our position in encouraging businesses from across the globe to flock to the UK,” Tom Shave, partner and head of fintechs at Smith & Williamson said.

Following Brexit there’s little doubt something is needed to retain the UK’s position in the fintech industry and while it’s fortunate that influential industry members are willing to push for solutions it seems there may be a way to go. 

Posted by: Rock Consulting