City grandees demand cash calls accommodate private investors
Senior City figures are calling for listed companies seeking equity capital to accommodate private investors, amid a fundraising rush.
In an open letter to chief executives of UK plc, City stakeholders said they fear rules giving existing stockholders first refusal on new shares will mean private investors will lose out.
The letter, first reported in the Times and seen by City PM, calls on FTSE and Aim-listed companies to include retail investors in any forthcoming equity raises.
Among signatories were Peter Hargreaves, AJ Bell’s Andy Bell and former chairman of Standard Life Aberdeen, Martin Gilbert.
It follows guidance from the Pre-Emption Group and the Financial Conduct Authority (FCA) set out temporary measures to help listed companies raise cash quickly during the coronavirus crisis.
Fashion retailer Asos was among a host of listed companies that issued equity raises. It raised £247m in a bid to shore up its financial position as it warned of a “prolonged downturn”.
The letter names Asos among a host of other retailers, including WH Smith and Joules, who have issued “significant” amounts of shares directly to institutional investors “typically at discounts to already depressed share prices.”
Asos chief executive Nick Beighton is a signatory of the letter.
The stakeholders say it is “more than just good governance” as retail investors have shown “unprecedented support” for listed companies.
“In recent weeks, they represented over 20 per cent of the volume on the FTSE All Share with 60 to 74 per cent of this volume being Buy orders.”
“UK stockbroking platforms are reporting over three-fold increases in new account openings. They can and should represent a powerful source of funds for listed companies.”
The letter was coordinated by Primary Bid, a partner of the London Stock Exchange.
Chief executive and co-founder said: “Retail investors should be afforded the same protections and participation rights as other company shareholders. The technology now exists to include retail in these fundraising details without compromising on timetable or execution.”