HL clients see 200% hike in retail access to follow on offers – but the FCA needs to do more
- HL clients were able to access 27.3% of transactions so far in 2023, a rise of over 200% since 2021.
- Last week, the Government published draft legislation to allow the FCA to manage public offers and admissions.
- The FCA said last week that it plans to consult on new rules for prospectus reform.
- But the level of access is still far too low. The FCA needs to put boosting retail investor access at the heart of new listing rules.
Tom Lee, head of trading proposition, Hargreaves Lansdown:
“Our push for greater access to retail opportunities means our clients are now involved in three times as many follow on offers as they were in 2021. This is a vital step towards building more vibrant markets, and engaged retail investors, but we need more action from the FCA.
Giving investors speedy access to follow on offers is critical given that so many of these transactions open for such a short time, sometimes as little as a few hours and often after the market closed. It typically takes providers around 30 minutes to provide access, but we’re live in less than 5 minutes. We message clients with easy links to be able to take advantage of the offer quickly.
Clients can buy additional shares at a discounted price, free from stamp duty. Our partnerships with four technology platforms mean clients now have the widest possible access to IPOs, follow-on offers and blocks under the same terms as institutional investors. This allows shareholders to defend their corner and avoid dilution when a company raises capital.
We are also seeing increased investor engagement through our new digital voting and with the introduction of the Investor Meet service which provides virtual access to AGMs.
Retail investor appetite to access IPOs and deliver long-term, diversified capital to a wide range of corporates remains high. But there are both market and regulatory barriers which deter companies from offering shares to retail investors. This reduces the overall capital available and can lead to consumer harm where existing retail shareholdings are diluted due to lack of access to secondary capital raisings.
Politicians, policy-makers and market participants all want to make the UK an attractive place for companies to list and, at the same time, encourage retail investors to invest in high quality assets. Making it easier for retail investors to access primary markets is a key way for the UK to achieve these twin aims and drive growth and innovation to benefit the UK economy.
As rules around listings are being revisited, It’s essential that the FCA prioritises improving retail investor access to primary markets. Retail investors should be given parity of access to these markets with institutional investors. Whilst the route to investing may differ, the reforms should ensure that it is no more burdensome to issue to retail investors than it is to wholesale markets.”
HL have been key in driving this change to champion investor interests
- Since June 2022, HL has onboarded 4 technology partners
- We have been engaging with issuers, investment banks and advisors to highlight the importance of retail investors in UK equity markets.
- HL responded to consultations: UK Listings Review (Lord Hill), UK Secondary Capital Raising Review (Austin Review), Primary Market Effectiveness Review (FCA)
- HL is a founding member of Investor Access to Regulated Bonds (IARB) working group.
Onboarding Technology Partners
HL’s Primary Markets Service offers the widest possible access to Primary Capital Markets. Since June 2022, we have onboarded 4 technology partners:
- Peel Hunt’s REX
- Winterflood Securities WRAP
- PrimaryBid
- Bookbuild
These are third party technology platforms which originate Primary Market transactions. In short, they sit between us, listed companies and investment banks and allow us to provide clients with greater access to IPO’s, Follow-on offers and blocks.
