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London tech firms cheer Kalifa Report to boost fintech

Jim Armitage
·3-min read
 (Hero Images/Corbis)
(Hero Images/Corbis)

London’s tech titans today welcomed recommendations from a government-commissioned report to boost the financial technology industry with a relaxation of post-Brexit visa restrictions and reforms to rules on stock market share listings.

The Kalifa Report, by tech tycoon Ron Kalifa, won plaudits from entrepreneurs in the sector who have long called for Britain to capitalise on its leading position in the so-called “fintech” world.

Russ Shaw, founder of Tech London Advocates said: “The report’s recommendations will help businesses overcome the immediate challenges posed by Brexit and the pandemic.”

He particularly cited Kalifa’s recommendation of the new stock market listing rules and new visa schemes as key to blostering fintech’s future.

The Kalifa Report calls for a new visa stream enabling UK fintechs scaling themselves up to bypass tough new Brexit visa rules when hiring the best talent from around the world.

Restrictions brought in by the government have appalled the London tech world as it depends on global talent.

The Kalifa report says foreign talent represents 42% of UK fintech employees.

“In order to remain a global leader in fintech the UK needs to strengthen its position on immigration or risk a significant shortage in human capital,” the report states.

It also calls for clear policies to boost homegrown talent by offering work placements for students.

“Due to covid, around 700,000 young people have left education into an extremely difficult jobs market. Fintech can provide young people with access to employment opportunities in an exciting and expanding sector. But more is needed to support students to understand these opportunities,” the report says.

On reforming the London stock market listing rules, it recommends liberalising the free float rules to give founders more control over their company’s destiny once they IPO.

Measures include allowing firms to list a small sliver of their shares on the public market, allowing dual listed shares, whereby the founders’ stock carries more control over the business and relaxing pre-emption rights, which mean shareholders must be allowed to buy additional shares in any future share issues.

The Kalifa report states that out of 3787 IPOs between 2015 and 2020, the UK got only 4.5%, where Nasdaq and the New York Stock Exchange got 39%.

London Stock Exchange chief executive David Schwimmer welcomed the proposals, saying: “It is important that we continue to develop the UK’s finance ecosystem, improving the route from private to public capital, in order to support these fantastic, high-growth companies.”

Kalifa’s wide ranging recommendations also include expanding tax incentives for fintech entrepreneurs and diverting some of the £6 trillion of UK private pensions into high growth technology opportunities. This may help prevent founders from selling out to big technology companies once they achieve scale, enabling Britain to build global champions.

Checkout.com founder Guillaume Pouzaz, based in London said it was crucial that London adapted to retain its leading status in fintech and welcomed the report. “Competition from other fintech centres is now fiercer than ever,” he said.

Investment giant BlackRock’s UK head Sarah Melvin said: “Fintech has played a crucial role in the UK becoming a global leader in financial services over the last decade.

“For the UK’s financial services industry to continue to thrive, it is important that we are a destination for high growth financial technology companies by offering the opportunity to access capital and to build scale in the UK and beyond.”

Open banking representatives added to their approval, saying the UK had grown faster than the rest of Europe because it had established a centralised and coordinated approach to encourage fintech firms to innovate in the sector. More than 3 million consumers or SMEs were now using open banking enabled products, the Open Banking Implementation Entity said.