Investment platforms have hailed the Austin Review a potential “watershed” moment for retail investors today as ministers and regulators look set to widen access to the UK’s capital markets.
The Treasury-led Secondary Capital Raising Review, chaired by Freshfields partner Mark Austin, was published yesterday after being launched last year in a bid to boost the appeal of London as a place for firms to go public. Among the key recommendations of Austin’s review were measures designed to force firms to open up secondary fundraising to retail investors and publicly explain how they have done so.
The review has been cheered by retail platforms today, with capital markets funding firm PrimaryBid, which has processed over $1.3bn in retail investment for public firms, telling City A.M. the measures could revolutionise retail investors’ access to the markets.
“Challenging Boards to include retail shareholders in all fundraisings was expected: it’s now a governance norm. But the Austin Review has gone beyond individual rights,” Mike Coombes, VP of corporate affairs said.
“It makes it clear that companies are expected to have a retail strategy from the outset, i.e. beginning with retail inclusion at IPO, it does stand for Initial Public Offering after all.”
Coombes said the reviews could usher in a “watershed” moment in access to the UK’s capital markets and allow firms to tap into an almost dormant $300bn pool of potential capital tied up in savings accounts.
Alongside the reforms Austin has pushed for wide scale digitisation of capital markets infrastructure which he said could “radically overhaul” shareholders’ ability to exercise rights and allow firms to better communicate with individual retail investors.
Coombes added that increased data and digitalised plumbing of the capital markets system would allow firms to more freely dip into the retail investor pool as institutional cash becomes harder to come by.
“Retail investors are an enormous source of capital, liquidity and diversity on the shareholder register – all things that a slightly sticky London market would quite benefit from,” he added.
Real investment platform Hargeaves Lansdown similarly welcomed the calls yesterday and called on ministers and regulators to take the recommendations forward.
“We welcome Mark Austin’s report and the focus retail access to secondary capital raising. HL clients own significant stakes the vast majority of AIM listed companies as well as a number of issuers on the FTSE 250,” a Hargreaves Lansdown spokesperson said.
“They should have a right to protect their position and this report is a good step in that direction.
“We urge the Government and the FCA to advance retail investors’ rights as they take these recommendations forward.”