UK-WIDE: An Introduction to Family Offices & Funds Structuring

PISCES Market Creates Unparalleled Opportunities for Family Offices Globally

Overview

The Private Intermittent Securities and Capital Exchange System (PISCES), a pioneering regulatory framework for buying and selling shares in private companies, is set to be launched by the UK government in summer 2025.

It offers founders, their teams and early investors a structured route for bringing in capital from family offices and provides family offices with a pipeline of curated investment opportunities, accompanied by a full reporting and disclosure process supervised by a registered auction agent, as well as the opportunity to engage directly with entrepreneurial talent.

According to the London Stock Exchange (LSEG), which will be a PISCES operator, family offices have the mandate to invest across public and private assets but do not always have visibility of specific deals. LSEG estimates that there is GBP2.5 trillion in family office assets under management (AUM) globally and approximately GBP760 billion in AUM across 8,030 family offices in Europe.

This article discusses how PISCES gives family offices a unique opportunity to buy into UK innovation and for UK companies to engage investment from strategic family office partners from across the world.

What is PISCES?

PISCES regulation is the framework for the creation of the private securities market (PSM), which, according to LSEG, is the world’s first regulated cross-over market that allows private companies to access the full distribution infrastructure of the public markets.

Private companies can offer their shares for sale at a periodic frequency chosen by the company. The company remains private between auctions. The company chooses the classes of securities to participate in auctions, the price range and whether to hold public or private permissioned auctions for closed classes of existing and/or potential investors. This means that companies can prevent purchases by competitors and still control their investor base.

Sophisticated and institutional investors from around the world can purchase shares on the LSEG Distribution facilitated through the LSEG’s member firms who register as registered auction agents (RAAs).

Core disclosures required to be made by the company are:

• business overview;
• management overview;
• three years’ financial information (audited if available);
• capital structure ownership and rights;
• significant changes to the company’s financial position;
• share information;
• employee share schemes;
• previous share capital raises in the last three years;
• directors’ transactions;
• an overview of material contracts and agreements;
• risks;
• major shareholders;
• price parameters;
• last PSM trading event; and
• indication of any future trading event.

A company may choose to omit information if:

• disclosure would prejudice a company’s legitimate interests;
• the company does not have access to the required information;
• contractual agreements prevent disclosure; or
• the information is not relevant.

Disclosure information is shared via a secure portal that acts as a data room, and a Q&A facility is provided to enable investors to ask questions of the company.

The PSM uses public market technology for trade execution and settlement – ensuring that trades are settled within two days of the auction date.

Tax

Trading shares on PISCES offers several tax benefits. Shares traded on PISCES are exempt from stamp duty and stamp duty reserve tax (SDRT), reducing transaction costs.

PISCES trading windows can be specified in the drafting of new Enterprise Management Incentive and Company Share Option Plan incentive schemes as specified events for exercising options provided this right is explicitly included in the terms of the options from date of grant. Rather unhelpfully, existing option agreements cannot be amended to achieve this, although the government will consider legislating on this point.

Currently, where shares are issued to employees and those shares are regarded as “readily convertible assets”, they will be treated as employment income. This means that employers will have to operate PAYE in respect of income tax and employee and employer class 1 national insurance contributions. HMRC has clarified in the 2025 Spring Statement PISCES technical tax note that if arrangements exist for shares to be traded on a PISCES platform at acquisition or shares have been acquired in anticipation of a company being admitted to PISCES, the shares will be considered readily convertible assets.

With regard to whether the value of a share traded on PISCES can be taken to have been transacted at market value, HMRC confirmed in the technical note that transactions on PISCES are likely to have been at arm’s length and accordingly deemed to have taken place at market value . However, HMRC may still review transactions between connected parties to ascertain that market value was achieved. See Technical note: Tax implications for companies and employees in relation to employees trading their shares on PISCES - GOV.UK.

Why PISCES is a game changer for family offices

The platform enables family offices to build strategic positions over time and gives family offices a structure for efficient private company due diligence and liquidity for their investments, which was not available before. Over time, suppliers will develop reporting tools that family offices could build into their investment platforms, which will enable them to track and monitor their private company investments more effectively.

Strategic considerations for family offices

The UK is home to one third of Europe’s fintechs (according to a Statista research report, February 2021) and is a global life sciences leader; according to the UK BioIndustry Association, the UK has started more life sciences companies than any other country in Europe. However, the UK lacks access to deep pools of late-stage capital. The undertaking of the Mansion House Compact is for the eleven institutional investor signatories to allocate at least 5% of defined contribution pension default funds in UK unlisted equities by 2030, currently GBP10 billion. This means that there will be opportunities for family offices to invest alongside institutional investors, which will encourage companies into improving governance and transparency, thus better preparing them for trade sales and IPOs.

Family offices that put together a strategy for portfolio investing can put together new employee incentive schemes with founders, without diluting founders, to bring in new talent and motivate existing teams.

Founders often have significant personal wealth tied up in their companies and the provision of strategic capital from family offices, and support and mentorship, can help founders engage in wealth planning and navigate the tricky road to exit.

Conclusion

Family offices have an unparalleled opportunity to build a mutually beneficial ecosystem where founders gain access to long-term aligned capital and family offices gain access to curated high-quality private equity opportunities directly.