Individual Investors Should Be Allowed To Invest In IPOs

A report published recently by the Association of Private Client Investment Managers (APCIM) and an independent stockbroker has called on the Government to allow individual investors to access initial public offerings (IPOs), such as those of the planned high-profile flotations of companies like RBS and Royal Mail.

Currently only institutional investors have access to shares at the first price offered when a company floats on the stock market, which the report calls unfair.

The report calls for the Government to lead by example by guaranteeing a retail investor tranche in the forthcoming sale of assets it owns, namely Royal Mail, RBS and Lloyds TSB.

In addition, it wants the UK Listing Authority (UKLA) to undertake a review of the current listing process with the intention of introducing a mandatory minimum retail offer on all IPOs and wants banks and brokers acting as IPO book runners to engage with the retail investment community in a active and consistent manner.

Since the Government has acknowledged the importance of building a culture of equity ownership in the UK, the report argues that individuals should be allowed to share in the success of UK companies, which would help to stimulate the economy.

To add weight to the argument, 80 per cent of investment managers and brokers surveyed for the report agreed and said that the sale of state-owned assets should include a portion of shares available to retail investors.

Moreover, 77 per cent of respondents believed that retail participation in UK IPOs are significantly below achievable levels, while almost 60 per cent said that the reasons investors cannot currently access IPOs were process and regulation, and 40 per cent said that private investors were not treated as fairly as institutional investors during a flotation.

Marc Stemmer offers financial planning advice to businesses and individuals; helping them to achieve their financial goals.

Leave a Reply