Retail investors need better access to IPOs, says Interactive Investor, as it reveals investment trusts were the most popular listings among its customers
- Deliveroo, Moonpig and Dr Martens are among firms to have had an IPO in 2021
- The top eight most popular IPOs among II customers were of investment trusts
- Four of the eight were also trusts involved in renewable energy infrastructure
Retail investors must be offered better access to British businesses listing on the London Stock Exchange, investing giant Interactive Investor (II) has continued to urge.
The financial services business said that without the investment trust sector, the number of initial public offerings (IPOs) available to retail buyers would be minimal.
This is despite the surge in IPOs on London markets in 2021, including food delivery giant Deliveroo, online greetings card firm Moonpig and bootmaker Dr Martens.
Small fry: II said that without the investment trust sector, the number of initial public offerings that retail customers would have been able to access would have been minimal
All three companies locked out retail investors when they debuted earlier this year, II noted, adding that without the actions of the investment trust industry, ‘it would have been a poor year for IPOs’ for retail buyers.
The investment platform revealed that the eight most popular public listings among its customers since January were investment trusts, with HydrogenOne Capital Growth taking the top spot.
Four of the eight were also trusts involved in renewable energy infrastructure, including VH Global Sustainable Energy Opportunities, ThomasLloyd Energy Impact Trust and Atrato Onsite Energy.
II also pointed out that these trusts had been in strong demand from private investors, with recent figures showing that £14.8billion of new cash has been raised for investment companies in the year to date.
However, its head of equity strategy, Lee Wild, reiterated the firm’s call to expand retail investors’ access to public flotations, which has included demands for a quota system that ensures they are not excluded.
‘From Dr Martens, Moonpig, Oxford Nanopore Technologies, through to the high profile, troubled start of Deliveroo, all took a VIP approach to their IPO listings and left private investors out in the cold,’ he remarked.
Acquisition: A fortnight ago, II agreed to be taken over by fund management group Abrdn in a £1.5billion deal that will keep the platform as a standalone business
‘This has to stop. After a year-long campaign by interactive investor calling for retail access to IPOs to be broadened, DIY investors continue to be left out.
‘We have called for a quota system, where companies are compelled to involve ordinary investors when they float.
‘There are growing numbers of retail investors in the UK, and most of them manage their portfolios via investment platforms that can provide quick and easy access to IPOs. Shareholder democracy has to start with open access to IPOs for all.’
Earlier in December, II agreed to be taken over by fund management group Abrdn in a £1.5billion deal, which will keep the platform as a standalone business and Richard Wilson as its chief executive.
In return, Abrdn will gain assets under administration of around £55billion and more than 40,000 new customers, many of whom have come to investing for the first time during the pandemic.
Firms like Hargreaves Lansdown and AJ Bell have also benefited from an upsurge in users of retail trading apps since March 2020, and there could be further gains resulting from the economic volatility caused by the Omicron variant.
This has led these two companies to post record results – AJ Bell attracted over 87,000 more customers, net inflows of £6.4billion and its highest ever assets under administration level of £6.4billion in the 12 months to September.
The Manchester-based firm hopes to further capitalise on the trend for retail apps by launching Dodl, an investment app that will enable customers to make a range of investments without paying commission charges.