Nasdaq sees private placement portal up by June

The following article from Reuters in an interesting pointer that reminds us of the power of private placements and PIPE type transactions.If you are interested in investing in this area please take a look at our specialist investment account.

By Joseph A. Giannone

NEW YORK, May 4 (Reuters) - Nasdaq Stock Market Inc. Chief Executive Robert Greifeld said on Friday the exchange operator expects to launch as early as June a system allowing institutional investors to monitor private stock placements.

The volume of private sales of stock, known as 144a transactions, is massive and growing, Greifeld said at a Securities Industry and Financial Markets Association conference in New York.

Last year, $162 billion of capital was raised through private placements, more than from all the public offerings through the New York Stock Exchange, American Stock Exchange and Nasdaq combined, where $154 billion was raised, according to Thomson Financial data cited by Nasdaq.

Nasdaq, the top U.S. electronic equity exchange, receives 10 times as many applications to register placements than it does for offerings, Greifeld said.

The new system, which awaits regulatory approval, would improve on the traditional practice whereby investors must contact brokers to determine what securities are available and their prices, Greifeld said.

The portal would not be a transaction execution system, Greifeld added. Interested investors still must contact the placement agent to buy or sell these shares.

"This could be the most important development for the equity market since 1971," Greifeld said, when the Nasdaq was founded. "I'm very excited about what this could become."

Nasdaq wants to build new sources of income as the mainstay stock trading business faces stiff competition from electronic trading systems. Greifeld also is under pressure to show Nasdaq can boost earnings following its recent failure to acquire the London Stock Exchange.

Greifeld also expects Nasdaq to launch an options exchange in the fourth quarter. Greifeld on the sidelines said Nasdaq is interested in making acquisitions in the options business, though he declined to elaborate.

Nasdaq, according to market speculation, has been in talks with the Philadelphia Stock Exchange, one of six major options exchanges in the United States and bourse operator OMX. Greifeld declined comment.

Greifeld, though, in the sideline interview said Nasdaq is not interested in making a bid for International Securities Exchange, an electronic options and stock exchange operator that recently agreed to be acquired by Deutsche Boerse for $2.8 billion.

UK Looks To Scrap Tax On Foreign Profits

The United Kingdom government is reportedly working on proposals that would allow British-based multinationals to repatriate billions of pounds in profits earned overseas free of tax.

According to a report by the Financial Times, the Treasury is preparing to launch a consultation document this Spring which will discuss a number of options, including an European-style “participation exemption” for foreign dividends, as well as a different approach to the anti-avoidance rules that impose tax on profits generated in low-tax jurisdictions.

The move by the British government is being viewed as part of its effort to improve the corporate tax regime, after several warnings from business groups that recent additions to UK tax legislation are making the country increasingly uncompetitive compared with its economic rivals. Seemingly heeding these calls, Chancellor of the Exchequer Gordon Brown announced in his budget statement last month a 2% cut in corporate tax to 28%, bringing the UK below the OECD corporate tax average.

The expected revenue loss for the government from exempting foreign dividends from tax is thought to be relatively small - in the low hundreds of millions of pounds. However, according to the report, in its informal discussions with business, the Treasury expressed concern that the change could lead to more substantial tax leakage, as firms borrow in the UK to invest in low-tax jurisdictions. Consequently, the Treasury is likely to claw back any lost tax receipts with more anti-avoidance legislation, in a bid to ensure that any change in the law is revenue neutral. The measures are also not expected to bring about an overall tax cut for businesses operating in the UK.

Nonetheless, it is anticipated that the change would be welcomed by companies, as they would no longer have to apply complex tax strategies to minimise taxes on repatriated profits.

In 2005, a similar measure enacted by the United States Congress, whereby repatriated profits qualified for a special 5.25% tax rate for one year as opposed to the standard rate of corporate tax of almost 35%, led to many billions of dollars being repatriated by some of the country's largest firms. However, many observers believe that the law largely failed in its objective of encouraging US firms to invest and create jobs at home.

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