Small shareholders want a seat at the table as IPO listings take off

by Jemma Jackson from interactive investor |

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Some 80% of DIY investors feel private investors should have access to all IPOs.

Some 80% of DIY investors feel private investors should have access to all IPOs and that it is unfair to exclude them.

The findings, from an interactive investor survey of 2008 website visitors between 8-9 February 2021, come after two recent high-profile IPOs excluded retail investors – Moonpig (LSE:MOON) and Dr. Martens (LSE:DOCS).

Richard Wilson, CEO, interactive investor; Andy Bell, CEO, AJ Bell and Chris Hill, CEO, Hargreaves Lansdown, have recently written to the Rt Hon John Glen MP, Economic Secretary to the Treasury and City Minister, calling for a consultation on how retail investors are given fair access to IPOs and not disadvantaged in favour of city institutions.

interactive investor survey

While the majority of respondents think investors should have the right to invest at IPO, whether they actually would do so themselves was more mixed. Close to half of all respondents (46%) said they would rather participate in an IPO from the outset, but a further 38% would rather wait and see how things pan out after IPO.

After January saw the best month for global IPOs on record, more than a fifth of respondents (22%) fear there is an IPO bubble, while the same number (22%) think there isn’t a bubble, and 57% don’t know.

Beyond IPOs, even more respondents (88%) felt private investors should be afforded the same access as institutional investors to new share issuances from listed companies.

Richard Wilson, CEO, interactive investor, says: “Retail investors are an important group who are too often ignored by UK plc. Denying them access to IPOs or secondary offerings is a blinkered attitude that ensures institutions hold all the cards.

“Retail investors are able to make grown-up decisions about the companies they invest in and should never be taken for granted. It is short-sighted for companies to deny them opportunities on the same terms as institutions. One day, these companies might come to rely on smaller investors.”

Andy Bell, CEO, AJ Bell, says: “IPOs have been the preserve of city institutions for too long. This is unacceptable in today’s market where there are millions of engaged and informed retail shareholders that are managing their own portfolios and want to participate in IPOs. It is wrong that these investors are still excluded from the majority of new listings at outset and UK plc needs to wake up to the fact that they form an increasingly important part of their shareholder base.”

Chris Hill, CEO, Hargreaves Lansdown, says: “Ordinary investors are being left on the sidelines when companies float on the stock market, and the institutions reap the benefits of a head start. Changing this can bring huge benefits for ordinary investors, not only in the form of increased returns but in boosting awareness of investing at a time when bank accounts offer next to nothing, society is on track to have too little put aside for the future and regulators are worried by people holding too much in cash. There’s also an advantage for businesses coming to market which can diversify their shareholder base and improve the visibility of their brand more widely.”

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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