New exchange will offer a stock of opportunities for young companies (The Times)

Stirling is famed as a place of commerce and trade. The old seal of Stirling from the 13th century bore a motto in Latin that translates to “Brits and Scots armed stand near, by this cross stand safe here”. Stirling bridge was a neutral ground where combatants could meet to “parley” and traders would conduct their trade; Stirling’s Corn Exchange and agricultural markets are famed in history and today the city’s bull sales represent the pinnacle of the UK cattle trade.

Hence, as Stirling’s Member of Parliament, I welcome the recent announcement of the creation of a Scottish stock exchange which has received my support and that of many colleagues in Westminster from across the political spectrum. This initiative will create high-value jobs, will require the use of an extensive network of Scottish professional services and will bring a much-needed source of private capital to help fund growing businesses, affordable housing projects and infrastructure projects, including our city deals.

Scotland and, indeed, the rest of the UK once had a thriving network of regional exchanges that allowed local communities to participate in the local economy. Why is now the time to revive this traditional model for modern times?

The new exchange will be part of Euronext, which is a major international stock exchange operator. Firms will be able to access capital from across the world from day one. Essentially it is not a provincial exchange only able to raise money from the local area but a global one serving the Scottish economy and connecting Scotland to an international network of investors. While the exchange will be open to Scottish businesses, it is not limited to them. Companies across the UK and the world will be able to list on the exchange given they meet the criteria.

Why do we need this when we have AIM in London? The key defining factor for the Scottish exchange is that it has a core focus of sustainability and positive impact investing. Issuers and companies will be required to demonstrate and report on their positive social and environmental impact. Investors will be able to commit their money with confidence that it is being put into bonds and companies that are making a positive impact on the environment and local economies. These are important to the community investor as well as larger stock buyers with a positive social responsibility.

 

Because of lower listing costs, the exchange will be open to companies with a market cap of £30 million-plus. This will open up opportunities to young, growing companies that want to keep control but need funding to scale up operations. The main selling point is about being best in class for impact investing. Scotland has always been a leader in ensuring that investment can make an impact and Scottish business is at the forefront of environmental initiatives that will help to drive our economy and the world to a more sustainable future. Having an exchange that supports this ethos will strengthen our offering.

Finally, the exchange will provide a platform for raising the private capital required to fund the city deals and regional growth opportunities. For too long, private equity has helped to finance public projects, exploiting double-digit returns that go to large hedge funds, many of which are based offshore and do not pay their fair share of tax in the UK. In Stirling we expect our deal to attract a great amount of private investment to supplement the booming local business environment. Securing investment for the long term will be far easier when there is a positive source of finance nearby and an exchange will allow local citizens to invest in, and benefit from, local initiatives.

In my work as vice-chairman of the All Party Parliamentary Group on Fair Business Banking, I have seen first-hand the negative impact of a concentrated lending market that lacks diversity. As a nation we have become too focused on debt or private equity funding. This has cut out opportunities for smaller growing businesses to scale up without taking on swathes of debt or giving up significant control of the business. This new exchange will be another place where people doing business can meet, like the Stirling markets of old, and create prosperity together.