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PrimaryBid and the rise of retail equity fundraising


PrimaryBid‘s recent participation in a GBP600mln fundraising by chemicals giant Croda International PLC (LON:CRDA) could be a sign of a sea change in the investment market and how companies will look to tap the market to raise funds.

Founded in 2016 by former Goldman Sachs banker Anand Sambasivan, the company operates as a platform to allow retail investors access to public companies undertaking funding rounds at the same time and the same price as institutional investors.

READ: Croda snaps up Spanish fragrances firm Iberchem for GBP736mln

PrimaryBid notifies its account holders when a company is using its platform to raise funds, offering them a chance to purchase shares using their debit card, which are then allocated into an investment account.

PrimaryBid initially came to prominence at the start of the coronavirus lockdown earlier this year, when contract cater Compass Group PLC (LON:CPG) used its app as part of a GBP2bn share issue. Since then, other large corporates such as Whitbread PLC (LON:WTB), Ocado Group PLC (LON:OCDO), Segro PLC (LON:SGRO) and housebuilder Taylor Wimpey PLC (LON:TW.) have all used the app for a retail offering alongside large equity raises.

All in all, the platform has completed just over 40 capital raises for firms and investment trusts since April, and with the pandemic set to bite once again with fresh UK and European lockdowns, more firms may be looking to the platform as a useful source of funding in tough times.

Democratising investing

PrimaryBid is part of a movement that some refer to as the ‘democratisation’ of investing, allowing individuals retail investors access to public markets on an equal footing to institutions.

It is also not the only company to attempt this model, with other organisations such as Crowdcube, an investment crowdfunding platform, providing similar access for retail investors into the private investment market.

Retail renaissance

For some, the rise of platforms such as PrimaryBid is part of a wider change in the popularity of retail investing, where members of the public and other small value investors have greater access to market opportunities through platforms that make the process easier for the uninitiated.

“We are seeing a retail renaissance; the everyday investor is more equipped and more informed than before and as a group represent significant chunks of companies across the world”, said Vinoth Jayakumar, partner at Draper Esprit PLC (LON:GROW) who backed PrimaryBid in a GBP38mln fundraising last month.

READ: PrimaryBid underlines growing presence in retail market with GBP38mln fundraise

“Retail ownership of public stocks in Europe averages c 15%. In the US it is even higher at c 37%. As interest rates around the world trend towards record lows, retail investors (just like institutional investors) are looking for yields and are increasing participation in the capital markets”, he added.

Jayakumar also said that platforms such as PrimaryBid are also receiving tailwinds from recent changes in the regulatory landscape, notably a recently announced government review of the UK listings regime, which could involve raising the GBP8mln hurdle for a prospectus based fundraise as well as the threshold of non-pre-emptive issuances to 20%.

“These measures could certainly boost retail investor participation in the capital markets process. Additionally, there are also various other segments of the capital markets such as issuances of bonds that have largely been inaccessible to individual investors – PrimaryBid has an offering in its product roadmap to address this market”, he added.

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