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Jeremy Hunt bets on creating a $1tn ‘British Microsoft’

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Jeremy Hunt has said the UK can create a $1tn homegrown tech giant to rival Microsoft or Google as he shrugged off foreign bids for London-listed companies as “part of how capitalism works”.

The chancellor has been leading a regulatory overhaul to make it easier for start-ups to access funds to fuel growth and stem the outflow of investment capital from UK equity funds.

“What’s my yardstick of success? I’d like to see a British Alphabet, I’d like to see a British Microsoft,” Hunt told the Financial Times. 

“It might not be for a decade. But I’d like to see a homegrown company with a trillion dollar [market] cap, with a big global position . . . That would reflect my ambition for the UK to be the world’s next Silicon Valley. It’s a big dream, but we can definitely get there,” he said in an interview.

A $1tn (£800bn) company would dwarf London’s most valuable businesses. Apple’s $2.9tn valuation alone is bigger than that of the entire FTSE 100, at £2tn. 

The UK’s leading tech company, chip designer Arm, was bought by Japan’s SoftBank in 2016 in a deal welcomed by the prime minister at the time Theresa May. It subsequently chose New York over London when it returned to the public market last year.

In the past year betting group Flutter, building materials group CRH and packaging company Smurfit Kappa are among those to have quit the FTSE 100 in favour of primary listings in the US.

Hunt’s aim of building global companies in Britain is likely to form part of his pitch on Thursday when he hosts a summit of tech chief executives at Dorneywood, the chancellor’s Buckinghamshire estate.

He insisted it was not too late for the UK to build tech groups as big as the US giants, saying: “There is no reason whatsoever that we couldn’t have some tech giants that are both UK born and bred, but also grow to global dominance through the UK capital markets.”

His reforms include an overhaul of the UK’s listing rules, loosening restrictions on dual-class share structures favoured by founders seeking to retain control of companies after they list and reducing the number of transactions requiring shareholders’ approval.

Some investors have warned that the proposals risk undermining Britain’s reputation for corporate governance and harming its attractiveness as a financial centre.

Hunt rejected concerns over a stream of takeover bids for UK companies, sparked in part by lacklustre share prices.

“Big companies IPOing and then going private is part of how capitalism works,” Hunt said. “And, very often . . . a well-run private equity company can really transform a business over a period of four or five years. So it shouldn’t worry us at all, if that’s happening to some great British companies.”

The value of bids for London-listed companies this year has hit its highest since 2018, according to Dealogic data, with most coming from overseas buyers taking advantage of relatively low valuations.

US private equity firm Thoma Bravo has agreed to buy cyber security company Darktrace in a £4.3bn deal, while FTSE 100 miner Anglo American and International Distributions Services, the owner of Royal Mail, are also targets for foreign bidders.

“When it comes to someone like Darktrace, what I want to make sure is that if the people who set up Darktrace want to be as big in terms of valuation as an Amazon or a Google or a Microsoft, they can do that in the UK,” Hunt added.

He cited the decision by Sir Demis Hassabis to sell DeepMind, the UK artificial intelligence lab, to Google in 2014. Mustafa Suleyman, one of Hassabis’ co-founders, said last year that the UK should be “more encouraging of large-scale investments, more encouraging of risk taking”.

Hunt said: “I want to make sure that the Demises of the future are confident that, if they want to, they can raise the capital here in London to stay independent so that ultimately the UK gets those giant tech players.”

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