Few in the investment community will remember the closing of the trading floor of the Scottish Stock Market in 1973 when a decision was taken to merge its activities with those of the London Stock Exchange. However, plans are advanced to launch a new virtual Scottish Stock Exchange initially headquartered in Edinburgh.
The driving force behind this initiative is the Scottish businessman Tomás Carruthers who has already tasted the success via a successful launch of Interactive Investor, an online trading platform, in 1997.
Several key building blocks are in place for the new Exchange to open – Euronext an established advisor to companies trying to raise International capital has agreed to licence their Optiq software platform to the venture, initial research published via the highly regarded Forbes was well received, and on 9 May 2019 it was announced that regional development agency Scottish Enterprise had awarded a £750k grant to the project. This it was hoped would fund the creation of 45 highly skilled jobs, firstly in Edinburgh with satellite offices also being established in Aberdeen and Glasgow.
Whilst some see the Scottish economy living off the Oil production boom of the last century and the export income of tradition fayre such as Whisky and Shortbread in fact a quick glance at the top 20 Scottish companies by value shows a wider range of companies that you might expect plus a collection of well-known names; banks such as RBS and Bank of Scotland, other Financial Services grandees Scottish Widows and Standard Life, Engineering services company Weir and Utility companies SSE and Scottish Power.
Of course, not all of these are uniquely Scottish – RBS includes Nat West Bank and SSE’s links to Scotland come as a result of the merger of Southern Electric and Scottish Hydro 20- years ago. However, the creation of such larger entities would not be possible without Capital Markets expertise which Mr Carruthers is hoping to develop within Scotland. It’s clear from the examples in the top 500 list that an entrepreneurial spirit and managerial expertise has long existed in Scotland. The BBC reports that the aim for this new market is to attract locally growing companies with a valuation of £50-100million, allowing them to grow under locally based management and provide an option to the growing trend of the sale of majority stakes in such companies to Private Equity houses.
Scotland is developing regional hubs and expertise in growth industries such as Renewable Energy and Biotechnology which would be attractive for local and foreign capital investment. Aside from Mr Carruthers the project is backed by a group of ex-NASDAQ traders and Scottish investors and has received the support of Scottish Business Minister Jamie Hepburn. Subject to regulatory approval from the FCA the Exchange is looking to formally launch in late 2019/early 2020.