The founders of rival platforms Hargreaves Lansdown and AJ Bell, Peter Hargreaves (pictured) and Andy Bell, are among a number of investment industry bosses who have written an open letter to UK-listed companies urging them to treat retail investors fairly in equity raises.
The letter, published in The Times, singles out a number of UK-listed companies that have tapped institutional investors directly for issues “typically at discounts to already depressed share prices”. Asos, Hays, Hotel Chocolat Group, Informa, Joules, MJ Gleeson, SSP and WH Smith are the companies it names.
It calls on companies to mandate retail tranches as part of any fundraise spelling out that this group of investors has shown “unprecedented support for UK plcs” during the coronavirus sell-off.
Retail investors represented 20% of volume on the FTSE All Share in recent weeks with 60 to 70% of this being buy orders, the letter said.
“UK stockbroking platforms are reporting over three-fold increases in new account openings. They can and should represent a powerful source of funds for listed companies,” it said.
Primary Bid coordinates letter of City bosses and fund managers
The letter was coordinated by Anand Sambasivan, founder and chief executive of Primary Bid, a technology highlighted in the letter that lets companies run a retail offer as part of an accelerated fundraise.
Interactive Investor chief executive Richard Wilson is another D2C platform boss that is a signatory of the letter alongside Martin Gilbert, Share Centre chairman Gavin Oldham and Killik & Co executive Paul Killik. It has also been signed by fund managers Gervais Williams, head of equities at Premier Miton, and Schroders’ Andy Brough.
The Financial Conduct Authority has let companies issue up to 20% of their share capital quickly and without a rights offering to broader shareholders.
But the letter urged companies to consider FCA guidance by “exercising their right to be consulted on, and to direct, bookrunners’ allocation policies”. It pointed out the FCA policy stressed the importance of “retaining an appropriate degree of investor protection” and that “issuers can play an important role in delivering ‘soft pre-emption’ in the placings”.
