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You're listening to Investing Matters brought to you in association with London South East. This is the show that provides informative educational and entertaining content from the world of investing. We do not give advice, so please do your own research.
Peter Higgins 00:17
Hello, and welcome to this Investing Matters podcast. My name is Peter Higgins and today I have the privilege of speaking with Neil Shah.
Neil Shah is the Head of Business Development for the tech sector of the London Stock Exchange. And has previously an investment banker for over 15 years, who's got a vast array of experience. Now, Neil, I want to start really because you've modestly say on your LinkedIn profile, that your job is helping tech enabled companies to go public on the stock exchange. However, we know you do far more than that.
So during this interview, we're going to try to explore what your role is, and what aspects of investing really matters to you. So firstly, I want to start with education. You went to LSE, London School of Economics.
What was your first sort of Inklings that you interested in maths or anything to do with that sort of specialism as a young man?
Neil Shah 01:08
Peter, firstly, thanks very much for having me. I'm big fan of your show, been listening to it for years, and really appreciate everything you're doing to help educate retail investors. And I guess I was one of those guys on that journey trying to figure out what to do. After school, I took a gap year, I had enough of studying and then came back to the London School of Economics where I really enjoyed economics as a subject, I saw myself having a career in the City.
I wasn't quite sure what that was going to entail, would it be in trading, would have been sales, investment banking, fund management.
The benefit of being at the LSE is that you were exposed to so many alumni who have gone on to some of these institutions also gone on to work in government and it opens up pathways for wanting to sort of think about.
It’s a great place to start and learn much more about the real world rather than just the academic world.
Peter Higgins 02:00
Really, I mean, we were fortunate enough to get a placement at Lazard you know, many big places in that summer placement going in as a, you know, as a young student, that was an absolutely phenomenal going like that.
Neil Shah 02:10
It was wonderful. I was the first of my family to go to university and get a placement at Lazard. But it was incredible. Just yesterday, I was speaking to a chap Giles Roshier, who actually hired me for that role.
He's now at Cowen and this is just how small the City is that people are still floating around. And I've had the benefit of having so many people who helped me along my career bit at school, getting me into secondary school, get me to university, and then they helped me get into the City for which I'm really grateful.
Peter Higgins 02:39
Brilliant. I want to move from your placement, your time at Lazard. Qquick synopsis really from a role there at Lazard all the way to being the Director of Stifle and just share some of the nuances of that particular journey investment banker of all, you know?
Neil Shah 02:55
Sure, Lazard was, I guess, a test by fire of what investment banking would be like.
It was an eight week placement over the summer, where you're given a week of training showed how to use Excel, showed how to produce pitch books, and then unleashed into the wild, where you are taken along to meetings, some in lunches, exposed to clients in some cases, and it's great way to figure out if this is the career for you.
I decided to pursue a career in M&A. So finished up my placement at Lazard, went back to uni, got my degree got a job at Dresdner Kleinwort in their tech M&A team.
For the first five years of my career. I don't think I saw a weekend in that first year., I think the highlight was going to Washington DC for a day trip to sell a business for Vista Equity Partners.
It was a really interesting time to learn to start in my career., I really want to get on the housing ladder, which is partly why I chose investment banking, where it was perceived to be slightly more lucrative than starting out as an accountant. And in hindsight, I probably should have gone down the accounting route and picked up a professional qualification but that's a story for another day.
It got me to where I am. And after about five years at Dresner I had the opportunity to go and work for a US boutique, Thomas Weisel Partners who were doing deals in Silicon Valley taking companies public in the States.
It was very different platform to what I was used to. And Stifel was a fantastic place to grow. Stifel came in and bought TWP so I think we start off with 20 people were about five people at the low point and about 450 people when I left, but it gave me the opportunity to work with the likes of George O'Connor who you know, Fred Walsh and a lot of US sector bankers who were just experts in their field be it cybersecurity, semiconductors, internet.
It gave me a really worldly view of what there is to be excited about in technology.
And fortunately for me, Stifel decided that there was actually a lot to do in the UK. Yes, we could start off by preaching to the likes of Just Eat and Delivery Hero and trying to convince them to go public in the States.
But actually, some of these companies are better off just listing in their home markets. And I'm really thankful that people like Mike Wroe at Just Eat, didn't listen to my advice and decided to go public in the UK. I think they did phenomenally well leading up to their merger with takeaway.com.
Peter Higgins 05:14
I want to go back if I may, because I'm conscious of the time we've got on this interview, I've got to ask you about some of the experiences around that time of 2005-2008/9, when the tech sort of euphoria regarding some valuations of stocks was going through the roof and the number of IPOs were absolutely phenomenal during that sort of era as well.
Neil Shah 05:36
I guess that was a bit of a low point Peter, because we had the tech boom in 2000. With everyone getting carried away with life.
I was listening to a podcast yesterday the other day, with a Benchmark Venture capitalist talking about Webvan and how exciting that was, at the time., Hhow it was a fantastic investment for the VCs, less so for those public company investors.
So fast forward to 2005, I think we were just starting to get going again, M&A was picking up, I was very much focused on the private side of the markets at the time, so less exposure to public markets. But I remember looking at a lot of public companies in 2007, with a number of UK, PE firms like Duke Street Capital, where debt was phenomenally cheap.
This is of course before the credit crunch. And I think I worked on seven private equity buy sides, none of which succeeded, because it was just really hard to actually get these deals done in the end that those deals which are equivalent mortgages quickly expired, I guess a bit like what we're seeing right now.
The market changed. I ended up working on a few take privates, one was Civica, coming off with 3i. And what I've seen is, these are really resilient companies. If you look at Civica and back then and Civica now, it's transformed.
You could say the same for business like Kewill, that went public recently in the US.These companies don't stop growing. And I think sources of funding are interchangeable.
Sometimes it's better to be private than it is public, and other times better be public than private. And I'm really glad to be at the LSE, where my CEO Julia Hoggett’s vision is to one day be agnostic between public and private markets, and really just give companies what they need, which is access to capital.
Peter Higgins 07:21
Brilliant, thank you. Now we're going to go onto your role now.
So share with us a brief overview of that role, you have the specialist role in the tech sector, for the London Stock Exchange, and how it plays a part in the initial public offering and the listings of companies just expand as much as you like here, because I think it's very important what's going on. And obviously, I'm a bit of a tech guy as well. So I love what you do.
Neil Shah 07:44
Thanks, Peter. So my job is essentially, to go out and meet founders and management teams and directors, and help them understand what their options are. Very often when you're a CEO, the advice you're receiving is often biased by the people with whom you're dealing.
So if you've just been speaking to an M&A advisor, or a private placement agent, as you've been growing your business privately, the chances are that they may have had little exposure to what the art of the possible is on the AIM market.
And our job here at the LSE is just to open people's eyes and show them what's possible. Everyone likes to talk about Amazon and if you'd participated in their IPO in 1997, if you invested $10,000 that would probably be worth about $30 million today, 33% annualised return, there's companies in London that have achieved a similar return to that, albeit over a sort of shorter timeframe. And just highlighting what the art of theat possible is for those founders for those management teams.
So they can create wealth not only for themselves, but for their employees and go on to acquire businesses.
I think there's a real lack of awareness in the UK, it's not really in our DNA to think about an IPO. And to be ambitious. I've met many CEOs who would be happy to make 10 or 20 million, but what we're trying to show them is a pathway to build bigger businesses and create more decacorns and centacorns, and the sort of companies that we're very familiar with that are on NASDAQ, and NYSE, there's no reason why we shouldn't be able to have them here.
Peter Higgins 09:22
Brilliant. I love that. I'm going to quote something here because I thought was quite a fascinating sort of viewpoint that was given by Peter Holten Mühlmann, the Founder and Chief Executive of Trustpilot, when speaking about why he chose London as a destination for his company, and a factor he spoke about positively was that he was seeking an IPO as a service. Now, as a Director and tech specialist at the London Stock Exchange, you must be immensely proud and somebody says that especially from an overseas company that's now chosen to list in the UK.
Neil Shah 09:56
Yeah, we're delighted to have Peter and Trustpilot in London, where this is a global business, they can access global investors, they can grow their presence and have a currency that they can use albeit to raise further capital down the line or execute mergers and acquisitions.
And this is a company with I think, just over $100 million of ARR, which would have been a small company in the States. And as I saw firsthand that Stifel, there's a real risk of getting orphaned, if you're too small in the States, whereas the benefit of London is that we've got a market that works for companies of all sizes.
We had Northcoders joined last year with a £13mn market cap and we also had Wise, with about a £8bn market cap. And both of those companies have demonstrated how you can be successful in London.
But to Peter's point about providing the service, that's exactly what we want to do, an IPO, just the start of the journey, we want to make sure that companies can use their equity efficiently. And if something's not working, we'd love them to come and speak to us and explore how we can how we can fix things.
Sometimes that involves changing the advisors around the table, where companies may have outgrown their current advisors, it might be looking at liquidity or how to get into an index. And through those means, pick up additional investors.
Peter Higgins 11:23
Brilliant. Now, you've touched on it a little bit. But I want to go back, if I may, a little bit more about the actual IPO process, and also about the actual governance aspects of it. Because obviously, there's some companies that might approach the London Stock Exchange and you go, actually, I don't think we would like to proceed with that on our behalf, you might have to look at another exchange.
Neil Shah 11:43
Sure. So let's say the governance question to begin with Peter. We're really just a venue for convening those with capital and those with ideas and matching the two.
We're very fortunate to have a really robust regulatory framework in the UK. So if you're going public on the main market, it's the FCA.
That are screening the prospectus is that advisors submitting on behalf of companies to make sure that the company is fit and appropriate for the public markets.
When it comes to AIM, we've got a separate division of London Stock Exchange plc, AIM regulation, who many investors and companies will be familiar with who are robust and in their approach. And they try to ensure that companies that are coming to market are, again fit and proper and ready for life on public markets.
AIM is particularly interesting, because you've also got the nomad Nomad–nominated advisors performing a regulatory function as well.
When I was at Stifel, I wasn't a qualified executive, but I sat alongside several of them, including Fred Walsh, and Alex Price. And their role was to ensure that clients were following the rules . aAnd if they needed to put out an announcement, that announcement was being put out in time.
Peter Higgins 13:01
Brilliant now, I'm going to touch on AIM in a little while on a different question. But I wanted to, I wanted to ask you this question.
You've supported many companies through the IPO process Neil, how often have you seen a real positive change internally with the, with the company once they've had that IPO and gone through the process and a sense of culturally, they're a little bit more like aware of who they are and what they're about, because they're getting that sort of resonance from international clients and customers now?
Neil Shah 13:29
Peter, I can't think of a single instance where that's not happened. Part of the journey of listing is to professionalise the operation. And very often we meet founders that have been running a nice business privately, where you don't need to produce accounts regularly. They're just for their internal purposes.
And part of the rigor of going through the IPO process is having a set of accounts and KPIs that they can share externally.
Having a presentation that they can deliver succinctly with new investors who might be unfamiliar with that story. And I think that's just really good practice being able to nail that, that elevator pitch but also being able to go into detail with a fund manager, like Anna McDonald at Amati or a Guy Feld really wants to hone in on what's driving a particular business or division.
Peter Higgins 14:22
Brilliant, thank you. Now going back to AIM, there's a distinct difference between listing on the FTSE and AIM, including the likes of inheritance tax for the founders, and so on so forth. You want to share any of the other nuances that are quite important and especially segments that you've got?
Neil Shah 14:38
Sure. So the ones that are really relevant for companies are AIM or the main market and it's a premium segment of the main market, from which you get access to the FTSE indices, albeit, the All Share, 250 or 100.
The real difference I think, is that AIM is now 27 years old.
It was designed for companies that were perhaps a little earlier in their lifecycle that needed a bit more flexibility and support from the Nomad regime. And I think it's a hugely underrated product for companies and founders.
We've got 216 tech and tech enabled businesses in London today, 153 of those are on AIM. So about 70%, really, for good reason, because a lot of these companies are serial issuers, they'll come back and raise additional capital each year to do M&A and they can do that without a prospectus using a circular pretty efficiently as Kape Technologies did very recently.
And, you know, deals are done in weeks rather than months. So that's often even faster than venture capital can operate. And this provides particularly fast-growing tech and healthcare companies have that flexibility that they need to grow quickly.
We've seen this with Kape as I mentioned, but Learning Technologies Group, CentralNic, Keyword Studios is on AIM they've done over 50 acquisitions, partly down to the flexibility that this market offers and EIS and VCT funds are often the lifeblood of these businesses when they start out. I met David Braben at Frontier Developments for an interview a couple of weeks ago for our Be inspired podcast, and they started off as a 4 million Pound IPO on a I'm sure backed by VCT money at the time.
Peter Higgins 16:29
Yeah, I saw your tweets about that. And exponential growth I've had since listening has been absolutely phenomenal for FDEV. So yeah, congratulations to them and to yourselves for helping them achieve that now. And that goes to my next question, really, that London is often described as the most international exchange in the world. Please, can you give some examples of why this is the case? You've covered some of this already, Neil. So please continue.
Neil Shah 16:53
I think it's really historic reasons, Peter that Britain has had quite a global role for a long period of time. And that's not dissipated. Today, we've got about 2,000 companies on our exchange, 700 of those are either headquartered overseas or have the majority of operations overseas. And as a result, the investors in London are very diverse. If you look at NASDAQ, and other exchanges, a lot of the investors tend to be domestic investors.
But in London, the weight of US capital probably outweighs UK domestic capital, which I don't think is very well known. You just take a business like Zoo Digital, which, when I was an advisor to Stuart and team there, I think they had about 50 million pounds of market cap and Frank Jennings who runs the Oppenheimer Fund, in the States now part of Invesco, only 20% line in this company, which despite is market cap was pretty unheard of. But it just goes to show that companies of all sizes in London are accessible by these investors who are just looking for interesting companies that they can access often an earlier point in their lifecycle than they may otherwise get to in the States.
Peter Higgins 18:08
Indeed, I mean, 2021, London Stock Exchange, experienced an absolute banner year of IPOs. I think I read somewhere that you said at over 100 IPOs.
Why was it so significant? Why was 2021 was such an absolute boom for everyone looking at well, lots of companies looking to list and quality companies at that as well.
Neil Shah 18:27
Sure, Peter, I think there's obviously an element of a COVID bump that every exchange around the world probably had its moment in the sun. But we're very fortunate to have eight, tech and tech enabled companies list in 2020, 37 of the 126 in 2021 coming to market. And to your point, they're really strong businesses across the sector.
If you believe that equities, follow the random walk, you'll probably say that half will go up, half will go down. And, of course, there's always going to be an element of that.
But if I look at aftermarket performance for London, it's actually been stronger than most exchanges worldwide. And I think that comes down to the way IPOs are done in the UK and Europe that you get to meet fund managers three or four times before that the book’s closed. And I think that provides companies with a lot of price discovery along the way that if you're trying to price a deal too high, you'll get that feedback pretty early on and adjust down. And similarly, if there's a hot deal, you can increase the size of the book, potentially increase the price valuation accordingly. And that ought to lead to better pricing and less surprises on day one.
I think it's very hard to get rich off an IPO on day one. I would love for investors to think a bit more long term about these companies and look where they might be in five or 10 years’ time rather than the next six months.
Peter Higgins 19:58
Indeed, I mean, you mentioned earlier, we've had companies that have listed in the UK that have outperformed the likes of Amazon that have gone up, you know, compounded over the years or 33%.
So if you held on to just one of those that have listened to the UK, you could you could do what you could do very well, indeed.
Neil Shah 20:13
Yeah, I met Louis Hall at Cerillion the other day. He was the founder that listed his business in 2016.
This was a spin out from Logica in ‘99. And he'd taken on some venture capital money for multiple ventures and others, that they listened 2016, Louis still held on to a sort of 30% stake in that business. And it's done pretty well, I think the shares are up about 10x. So it just goes to show what the art of the possible is. And I should go, I should also say, Peter, that everything I say, shouldn't be taken as investment advice.
Peter Higgins 20:50
Absolutely, absolutely. Spot on. Now, your role, to reiterate, is to enable entrepreneurs and boards to help them to build bigger and better businesses, more sustainable businesses. Well, we talked about valuations, please, can you share with our listeners, global listeners, the rule of 40? And why this is important regarding valuations, please? Because not one that our normal investors hear of.
Neil Shah 21:14
Sure. So the first time I mentioned the rule of 40, people looked at me strangely, and asked me if I was smoking something. But it's a shortcut, really, to understanding valuation. So the way I look at rule of 40, and it's great to see more city analysts looking at this as well, is to take growth, and to look at EBIT margin. And you could equally replace the EBIT margin with free cash flow or another measure of profitability or cash flow generation.
But what we're trying to do, Peter is say that valuation should not just be predicated on growth alone, what's the cost of that growth, it's how much you're burning. And equally, if you're a highly profitable business, that's going to impact valuation as well.
So if you just take the growth rate as a percentage and add on the margin in percentage terms, if you're growing at 20%, you've got a 20% margin, you're on that line that the rule of 40, that would be the equivalent to not growing at all and having 40% margin, akin to some very mature software businesses, or the other way around, you might be a loss making high growth, business growing 80 or 120%, in which case, you can justify having a bit of burn. And all of those ought to be equivalent is the argument.
And when we start to plot businesses, on this basis, you look at EV/revenue multiple to the rule of 40.
Regardless of which exchange, you run these analyses on, if you're running global comparisons, like we do the exchange, you often find that those companies that have stronger fundamentals, the further there are on that rule of 40 on the x axes, the higher the valuation is on the y. And so you often see that this sort of trendline and it's probably more of a curve than it's a trend line. Companies that are super profitable and growing really quickly, will get outsize multiples compared to often significantly larger businesses in other markets that just don't have those fundamentals.
Peter Higgins 23:17
Brilliant. I love that explanation. Thank you ever so much for that. Now, NeiIl, one of my bugbears regarding tech companies, especially UK ones. And I know that the plan and the strategy and the way that it is set up on FTSE and AIM is for companies to grow they naturally grow and organically grow.
However, our companies tend to get to a certain size before they're bought, taken over, subsumed by overseas companies. How and what could we be doing better to enable us to get our first trillion Dollar valuation company.
We get lots of unicorns, but we don't tend to get that multi multi billion Pound company that goes on to 500 million sorry, 500 billion Pound company and more to get taken over by our larger peers. Why is that?
Neil Shah 24:06
I think we just need to be more ambitious. A) as founders, but B) as investors. We're very happy just taking a 30% premium when it comes along as a takeover bid. And I think we just got to think a little bit more long term and be supportive of these businesses know companies like GBG were given a hard time by fund managers for not doing enough M&A. And then when they do an M&A deal, they're criticised for paying too much a. And the shares get hammered. And I think in order to grow, companies do need to be acquisitive. And this can work you look at Melrose, you look at Keywords.
There's no reason why companies can't be serial acquirers and use that to augment their organic growth. But I think ultimately comes down to us all being a little bit more ambitious, and just having a bit more of a risk appetite for building these larger businesses, but I'm starting to see that now. I think last year, we had as many tech and tech enabled businesses in the FTSE All Share, as we did back in 2000.
So times are changing, we just need to keep up the act.
Peter Higgins 25:16
Brilliant, I wish you and seem very well with that at the London Stock Exchange. , nNow, another aspect of this sort of, let's invest in and expose these companies that are a value to private investors. Now, how is the London Stock Exchange, enabling and encouraging participation more of retail investors in IPOs?
Neil Shah 25:40
Sure, so you'll be familiar with Primary Bid.
This is the business that we invested in, through their series B., Tthey are one of now several providers of liquidity to retail investors, which is great to see. And that was our objective that we looked around the market.
Saw lots of banks struggling to involve retail in deals.
Sometimes not for any bad reason, other than it was just complicated.
That if you're trying to raise capital for Ocado, and you want to involve 1,000 retail investors in that in that issue, it's very tricky for a bank to do to expand that register, because suddenly you're you've got more retail investors, then you have institutions, and sometimes not the regulatory approvals to even deal with some of these investors.
So being able to leverage technology to make that, that journey easier for both sides, company, and investors, it makes a lot of sense. And I think Primary Bid’s been used on about 270 odd IPOs and ABBs. Accelerated book builds now, which means that if you're an Ocado, if you're a Kape, building and fundraise, you can put that deal up on the Primary Bid app.
That gets shown around, Peel Hunt got a similar offering through their Rex platform, I'm hearing good feedback about that, that business as well.
So it's just great to see. And I think they campaign in the Mail has also highlighted that, you know, retail shareholders are not all day traders, or mis- sold pensioners. There's people like you and I know saving for ISAs and SIPPs. And this money is really as good as fund managers money. We deserve an equal shout.
Peter Higgins 27:24
Brilliant. And to add to that, there is some stickiness for some of our investors as well, in the sense that we do buy and hold and we're not looking to flip all the time as well.
Peter Higgins 27:33
Now, we've seen some declines in 2022. Now across many stocks and tech stocks as well. And we've also seen a significant declines across the likes of Meta, Alpha, Alphabet, sorry, Amazon, Alibaba UK listings including the likes of Wise, TPX and Oxford Nanopore.
However, what I want you to say regarding that and your own investing portfolio, you seeing these lower valuations as opportunities? And should investors be looking now to think, actually, you know, a lot of people have walked away from these stocks.
But if I'm thinking like you said earlier, three years, five years, 10 years away from now to, you know, 2030 odd, these could be bargains for me to be to be investigating further instead of going, no, not going anywhere near them.
Neil Shah 28:21
I'm certainly of the view that there are bargains to be had in this environment, Peter, that if we weren't back to previous downturns, there are moments that you go through as an investor and you think, is the world's going to end?
I remember being at Dresdner, where I was allowed to spread bets on the FTSE and I think, you know, it was it was close to touching 3,000 at the time, and there were people around me thinking that, well, you know, is this going to go any lower or is this the bottom.It's really hard to time that bottom. But given where we were last year, we got carried away, I think we've got carried away in the other direction that valuations have come off. And this some of these companies, you mentioned, are being quite resilient.
You know, I was talking to Goldman Sachs earlier today, one of the banks on Wise. And it's reminding me that they started off at 8 billion Pounds in market cap, and it's probably closer to seven now, if you think how much fintech’s come off as a sector, I'm actually that's a stock that's held up pretty well, in this environment.
Sure, it's been lower, but it's certainly come back. And it boils down to the fundamentals that if you're looking around Europe, for companies, with more than, let's say $500 million of revenue, there's very few places you can look where you can sort of see companies growing as fast as an Adyen or a Wise.
So there's an element of scarcity value, I think, in the UK that supports these companies, for sure, definitely some opportunities to be had. But it all comes down to doing that homework. It's very easy, just to see just look at that pure share price and say it's coming off but you've really got to understand why. And is the share price deviating from the underlying fundamentals of that business.
Peter Higgins 30:06
Brilliant. Now I'm trying to recall he correct me if I'm wrong, was Wise as TransferWise as it was now. Now, why is one of the few companies that IPO without raising any money? Were they one of those?
Neil Shah 30:17
That's right, yes. So it was the first US style direct listing in London and the largest direct listing here. We've had other companies like Metro Bank in the past that have used this mechanism. But this was the largest. And the reason Peter was that this is a business that had been profitable for a long time, didn't feel that they needed to raise additional capital. We just thought that if they put the shares on the market, and democratise access to all investors, that that would be sufficient.
Peter Higgins 30:47
Yeah, that the market decide and as you say, and you've used quite, quite rightly, the art of what is possible regarding the market deciding yeah?
Neil Shah 30:57
Yes. And now see that the sad reality is that a lot of companies that come to us do need capital. And that means that an IPO is perhaps the best way to do that. We've not seen as many direct listings and SPACs as The States. And I think that's really for good reason that you've got a process here that works. We've seen IPOs like Fonix, Calnex, done in and LendInvest done in three and a half months from start to finish. And it's a sort of proven process where you get that price discovery, and a lot of support along the way. So I sort of wonder why more companies just don't default to this default route.
Peter Higgins 31:41
And I think I think that they are slowly getting, you know, the essence of why it's such a benefit and the service and international exchange. So they are there are more and more companies coming and I think the beauty of it is that we nurture so many anyway, you know, these hubs that we've got up and down the country.
I spoke to Stephen Kelly, fantastic guy who has been you know, doing all things tech and doing Tech Nation, former CEO of Micro Focus and Sage.
We nurture so many companies, so can list more of them and keep them listed. That'd be phenomenal. I think going forward.
Neil Shah 32:10
Absolutely. It's great to see this flywheel slowly building, Stephen has been phenomenal and super helpful to so many founders and CEOs that I've met and he sent a few our way.
We've referred a few to him that wanted advice on how to scale in the States where he is very well placed to advise.
It's great to be able to call on people like Stephen but also, some of the VCs, like Saul and Robin Klein, who've done so much for this ecosystem.
One of my biggest frustrations Peter, as a banker, was that when I was working on the private side, I rarely met people doing public deals. And then on the nomad and broking side, had little dealings with VCs and private equity.
W're trying to fix that here at the exchange by bringing the entire ecosystem to bear because really, we've got a strong stock market that's in everyone's interest that gives founders VC, private equity, optionality, and they know very well that if they're going to return to market with their next deal, you can't just sell a horse at the top of the market, it's got to deliver and sort of separating what's a good company from what a good investment is, is vital. And I think those lessons are being learned sometimes the hard way.
But it's great to see and I'm sure if we come back in five years, we're going to have an even more vibrant ecosystem. And we've got a team of 20 at the London Stock Exchange scattered around the globe. And we're not only nurturing companies in the UK, but companies in India where I’m next week, my colleague, Tom Attenborough is in Singapore, meaning some sizable companies, which maybe too big for their home markets, too small for the US exchanges. But you're absolutely ripeght for London. And ultimately, that means more choice for some of your viewers and listeners to invest in.
Peter Higgins 34:03
Brilliant, I love that. And I love also the fact that you actually purchase Refinitiv, which is when it answers all the big data and the AI technologies for all the companies to speeding and advancing the technologies going forward. So that's absolutely fantastic.
Now, I'm conscious of the time I've got two more questions for you, if I may, Neil. Neil, you're fortunate enough and you've said you know, you're going to go to India, etc. to see and witness thriving, innovative companies from across the UK, Europe, US and the rest of the world.
What aspects of tech at the moment is exciting, new, the most regarding investing and why?
Neil Shah 34:37
Sure. So I see opportunity across all of technology, sorry to sit on the fence Peter, but if you look at some of the companies we've seen last year, we had seven fintechs, listed in London, most of those for IPOs are others through reverses.
That's a trend that's continued this year with the likes of Fiinu.
If I look at our IPO pipeline, that's probably got the greatest concentration. And partly because London has been such a great hub for incubating these businesses.
They've grown and scaled VCs and growth equity firms have supported that journey. And now they're looking for the next stage which has to be IPO. And yeah, there's a big prize there that financial services industry that hasn't been really disrupted for so many years. And now we're all realising the benefits of being able to use our Revolut cards when we're travelling to Turkey as I was last week.
You know how simple and easy that that process is, or being able to purchase goods with Klarna or Zilch online and the benefits.
So I'm really excited about this crop of private companies, that's just fintech.
I could say the same for the video game space, where if you look at Sumo and Codemasters, these two companies, by the way that I think grew thirty percent plus each year, when they were on market made investors money.
So when tinyBuild and Devolver came along, there was a lot of interest for initial companies in the space.
The good news is that there are literally hundreds of companies in the UK, but also overseas of a similar nature.
So there's no shortage of opportunity. Basically, you say what you want, and that I'm pretty sure we could find it.
Semiconductors is another theme. We've had two semiconductor businesses list this year. EnSilica and Sondrel last week. And they think what a tough environment it is, at the moment, again, IPOs done, there was tremendous support for this strategically important part of the market where these chips are used in all sorts of devices.
I think Sondrel’s devices have been used in iPhone, Oculus, PlayStation, Mercedes, Tesla.
And this little company is based near Reading, it's, it's phenomenal. We just need more companies like this, founder owned that have built a great business and can hopefully do so and grow that business on the market.
Peter Higgins 37:06
Brilliant. Yeah. I'm just saying on the London Stock Exchange. It's absolutely phenomenal. Now I've got a final question for you. The and this is a fun one. I think your children will enjoy this question as well.
You're a tech expert. So I'd like to close this interview with this question today, I am granting you the power to change one thing for the betterment of all investors small and large. What would that be and why Neil?
Neil Shah 37:30
Oh gosh. There's so many things we, we could we could tackle that one thing. So I'm a huge fan of EIS and VCT. And I think the limits 20 million pounds is just too small in 2022. I think that needs to be significantly increased to help nurture some of these businesses and get them to a larger scale, and also give more investors who may otherwise not have the risk appetite to invest in some of these companies to support their journey onto the markets.
Now, I don't think it has to be a huge step but you know, seeing a limit of 50 million pounds would do tremendous good and encourage more firms like Guinness, who have set up a VCT recently, to follow suit.
Peter Higgins 38:17
Brilliant. That was brilliant answer. Thank you very much for that. Neil, thank you so much for that interview. That was Neil Shah, Director, Head of Business Development for the tech sector at the London Stock Exchange Group.
Thank you ever so much for being on the Investing Matters podcast with me, Neil, been absolute pleasure speaking with you, sir.
Neil Shah 38:34
Thank you so much, Peter.
LSE 38:47
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