Two of the UK's largest retail investment platforms said a new service will make it easier for small private investors to get access to initial public offerings and secondary fundraisings.
Hargreaves Lansdown PLC (LSE:HL.) and AJ Bell PLC will offer their customers access to wider participation in markets via the REX platform, which is run by broker Peel Hunt Ltd (AIM:PEEL).
Although the PrimaryBid service has started to open up IPOs to smaller investors, many companies still only look to large City institutions when they float and raise money via placings once they are on the market.
With private investors locked out of over 90% of the IPOs on the main market and AIM over a three-year period up to 2020, the bosses Hargreaves, AJ Bell and Interactive Investor complained in a joint letter to the Treasury last year.
This may have improved slightly, but still 87% of fundraising over the past 25 years have excluded ordinary investors, according to Chris Hill, Hargreaves Lansdown’s chief executive.
“Existing investors miss the opportunity to buy additional shares at a discounted price and free from stamp duty and the transaction results in their existing shareholdings being diluted, a loss of value through no fault of their own. This has to change,” he said in a statement today.
AJ Bell CEO Andy Bell said retail investors should be seen as an attractive source of capital for a company considering a float.
“The majority will be long-term shareholders investing via their pension or ISA and this can help create a healthy and diverse shareholder base,” he said.
“Many of them will also be customers of the listing company, which can help generate further brand loyalty and deepen the customer relationship.”