Diversification key to TISE’s success
THE International Stock Exchange has said it remains focused on growth through diversification amid UK legislative changes that could affect the business.
The Guernsey headquartered exchange’s parent company TISEG, The International Stock Exchange Group, said the Draft Finance Bill 2022 included legislative changes that ‘may impact the volume of new, and possibly existing, listings on TISE’.
The two principal changes relevant to TISE were the introduction of the qualifying asset holding companies regime and the removal of the listing requirement for UK Real Estate Investment Trusts owned by institutional investors.
Asset-holding companies are those used as intermediate entities in investment fund structures. Their role is to facilitate the flow of capital, income and gains between investors and underlying investments. UK resident companies that currently list on exchanges such as TISE may no longer need to in order to avail themselves of a critical UK tax exemption.
REITs are globally recognised tax efficient structures for investment in real estate – and TISE has held more than 40% of all UK REITs.
‘It is not currently possible to identify how many issuers will meet all of the eligibility criteria or elect for the QAHC regime. TISE is actively engaging with the professional advisor community to try to better understand the practical application of the QAHC regime in advance of its introduction in April 2022,’ said a TISE spokesman.
‘Rather than seeking to rely on the unknown and untested QAHC regime, issuers may still benefit by availing of the QEE. This established route provides the highest level of certainty, combined with a cost-effective and expeditious listing service from TISE.’
On REITs, it said: ‘Under the prospective legislation, where at least 99% of the ordinary share capital of the company is held by institutional investors, shares may no longer need to be listed on exchanges like TISE in order to qualify to be a UK REIT. TISE’s share of the listed UK REIT market is likely to contract sharply from April 2022, though the likely revenue loss is modest.’
On capital structure, the update said the TISEG board was reviewing options for the return of capital to shareholders during the course of next year.
‘Whilst the board remains optimistic that the prospective UK legislative changes will not severely impact listing volumes and therefore revenue, the position is unlikely to become clear until the legislation comes into force in April 2022 and the board will provide a further update soon thereafter. The board needs to be prudent when assessing the business’s current and expected cash requirements.’
Cees Vermaas, chief executive officer of the company, hailed progress made in achieving strategic priorities in the year to date.
‘It has already been a record year for volumes of new listings and we have also delivered on a number of key initiatives to grow our core bond market and to ensure we offer the very highest standards of service to clients. We remain focused on sustaining future growth through diversification and scaling-up the business,’ he said.
