22nd Feb 2021 07:00
(Alliance News) - Trading platforms AJ Bell, Hargreaves Lansdown, and Interactive Investor have all written to the treasury complaining about their exclusion from a majority of initial public offerings, the Times reported on Monday.
https://www.thetimes.co.uk/article/open-up-ipos-to-private-investors-treasury-told-gwsc2mmdd
The heads of the three companies wrote to City minister John Glen last week asking that he consider forcing companies to consider retail offers in new flotations as well as the opening of a wider consultation.
The letter noted that smaller investors has been unable to buy into the recent IPOs from online personalised cards and gifts retailer Moonpig Group PLC, as well as shoe maker Dr Martens PLC and Hut Group owner THG PLC.
In all three cases, share prices for the companies rose to an instantaneous premium to the IPO price, forcing private investors to pay premium prices.
The letter, as cited by the Times, said: "As it stands, retail shareholder rights are almost completely ignored when it comes to the vast majority of IPOs, which largely take place between City institutions behind closed doors."
The letter also accuses investment banks, according to the Times, "of deliberately discouraging founder entrepreneurs from going for retail offers and sometimes including small investors only when institutional demand was likely to be weak and the IPO less likely to succeed."
Hargreaves Lansdown Chief Executive Chris Hill, as well as AJ Bell CEO Andy Bell and Interactive Investor CEO Richard Wilson co-sent the letter.
Wilson called the current system "a closed shop" when he spoke to the Times and accused it of "choking the capital-creation process".
He also said that Interactive Investor would be sure to include a retail offer in a floatation, which Wilson believed was "likely", as AJ Bell had done in its own 2018 IPO.
By Anna Farley; [email protected]
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