The debate about how to attract tech companies from Nasdaq or even the NYSE has rumbled for a decade or more © REUTERS

The City of London Corporation reckons the Square Mile needs to reinvent itself. Again. But its plans for the capital are more decade-old throwback than radical “reimagining”. 

The suggestions from the City’s local council and its consultants are sensible enough. They’re just more like the latest Madonna rebrand for her next world tour than a truly transformational plan. 

Its focus on sustainability, small business and start-up hubs recall a David Cameron manifesto from ten years back. That was the pre-Brexit era when then-Conservative leader Mr Cameron went round hugging huskies and “hoodies” to champion the party’s green credentials and inclusivity. He promoted Silicon Roundabout — an area right next to the City with a number of tech start-ups — too, as part of efforts to shift London’s centre of gravity from banking to tech in the wake of the financial crisis. In the wake of this one, the corporation wants to “enable green transformations”, “open London’s opportunities to everyone” and “create dedicated innovation spaces”. Laudable, but hardly landmark proposals. 

Another corporation proposal, that stock market listing structures are reviewed to keep London competitive, is also reminiscent of past enthusiasms. The debate about how to attract tech companies from Nasdaq or even the NYSE has rumbled for a decade or more. London keeps coming up with ways to tweak IPO standards that could otherwise discourage companies with their excessive emphasis on good governance. It brought in standard listings in 2009, then the London Stock Exchange’s High Growth Segment in 2013. A sizeable listed tech sector remains elusive.

The latest fad of dual-class share structures, which can allow founders to keep control of public companies, won’t change that. True, they’ve been popular with the likes of Google, Alibaba and Facebook. But allowing the structures on the LSE’s premium list won’t magically make the exchange popular with big tech. There are plenty of other reasons keeping tech companies from listing in London — not least the much bigger pool of investors and higher valuations on offer elsewhere. 

The City will no doubt change. As with the last crisis eleven years ago, some businesses won’t survive. They will need to be replaced. Combine Brexit with the Covid-19 crisis, though, and the reinvention required could be more than the corporation and its consultants imagine.

Safe seat

When Trainline, the transport booking app, was in its infancy, it was sometimes unfairly blamed for not allocating seats to rail passengers, writes Mathew Vincent. Ticket holders searching in vain for Coach D 21A on the East Coast mainline were wont to be met by headshaking guards muttering “Oh dear, booked it on Trainline, did yer?” One American even took to TripAdvisor to bemoan the presence of immovable and possibly incomprehensible northerners in his Trainline-purchased seats. But after seven years of technological advances, 250 train company tie-ups, and a £1.7bn stock market flotation, one Trainline user is more than happy to give up her place: chief executive Clare Gilmartin.

On Tuesday, she said it was time to see less of her 300 tech specialists and more of her three children. However, the 13 per cent share price fall that followed said much about the risks her successor, Jody Ford, must negotiate.

Covid travel restrictions may hit sales and profit for longer. Trainline’s first-half revenues were less than a quarter of those a year previously. Concerns over a second wave of the virus have since led analysts at Panmure to forecast a £20m full-year loss.

A UK rail industry review by Keith Williams threatens a complete replacement of the ticketing model on which Trainline has been built, with contactless payments and best price guarantees doing away with a need for online comparisons. Industry watchers think he may even propose a state-run ticket system.

Quasi-nationalisation of UK rail — with the government covering train company losses — also suggests a different set of commercial relationships for Trainline in future.

But Mr Ford may find these risks are more manageable than investors fear. 

Lower debt and improved liquidity headroom leave Trainline better placed to wait for passengers to return — and proposals for new three-in-seven day season tickets suggest complex ticketing will still be needed.

Competition from a government-run ticketing system also seems unlikely any time soon, given the government’s lack of data handling expertise exposed by the Covid crisis.

UK nationalisation should pose no more threat to the business model either, given Trainline already works with state-run railways across Europe. As one insider pointed out, it stood ready to work with the UK’s arch-nationaliser Jeremy Corbyn, had he won the election. And Mr Corbyn would surely have embraced Trainline, too, given his own well-documented difficulties in securing train seat reservations.

City: cat.rutterpooley@ft.com
Trainline:
matthew.vincent@ft.com



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