The chief executive of Thought Machine, one of Britain’s most valuable fintechs, has thrown his weight behind a London IPO (Initial Public Offering) but admitted he is under pressure to list in New York. Paul Taylor, who founded the London-based banking software provider in 2014, said that Thought Machine was “definitely going to IPO” and gave his clearest public indication yet that the capital is management’s preferred destination.
“London is our home, and all other things being equal, we would be very keen to list in London,” Taylor, a former Google executive, said. “But it’s not just a decision that only I can take – our existing investors would have a strong voice in that. There is a lot of momentum behind New York.”
Last valued at $2.7 billion in a May 2022 funding round, Thought Machine’s IPO would be a much needed win for the London Stock Exchange (LSE). Recent years have seen the bourse left in the dust by US markets, where deeper pools of capital and a less cumbersome regulatory environment have drawn in major British names like chip designer Arm.
A slump in IPO’s and string of big players ditching their London listings have spurred the UK government and regulators to propose sweeping reforms aimed at boosting Britain’s capital markets.
Taylor said the LSE had been “fantastic in terms of encouraging people to list here” and praised the Financial Conduct Authority’s overhaul of listing rules in July, designed to make it easier for companies to float in London. He hailed Raspberry Pi’s June IPO, which valued the computer firm at £542m, as an example of recent “local successes” in the UK market.
“I think most of the tech companies in London would like to list here if we could,” he added.
However, Taylor warned the UK needed “a change in the investor sentiment, and for the pension funds and people like that to be happier to invest in higher-risk, high-growth stock”.
“It’s slight tragedy that some of the most active money in the London stock market is not UK money, it’s international investors,” he said. “That’s good in the sense that we have got inbound investment, but it means British people, funds and companies are not owning British stocks.” While firm on London as his “first choice” location, Taylor was less clear on the possible timing of a Thought Machine float.
“There are a bunch of companies that went too early in 2021, so I think we are taking a very sensible route,” he explained. “We’re going to IPO when the time is right, so it will not be next year or the year after at least. Possibly it could be 2027, possibly it could be 2028, but you would lock in a date about 12 months before. You just need to grow the business as much as possible before then.”
Thought Machine is not alone. It is one of a crop of British fintech “unicorns” founded in the 2010s that are now weighing IPOs in what will be a test for London’s allure. They include digital banks, Revolut, Monzo and Starling, and buy-now pay-later provider Zilch.
Thought Machine sells cloud-based banking infrastructure and has deals with major leaders including JPMorgan, Lloyds and Standard Chartered, as well as neobanks like Atom Bank. Lloyds and JPMorgan are also investors, alongside the likes of Morgan Stanley, Singapore-based Temasek and Italian bank Intesa Sanpaolo.
With some 550 staff and offices in London, New York, Singapore, Sydney and Melbourne, the company’s growth underscores the wider emergence of Britain’s banking software-as-a-service market.
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