UK Trading Execs Urge More Retail Investor IPO Inclusion

Executives at trading platforms AJ Bell, Hargreaves Lansdown and Interactive Investor in the U.K. are pushing companies to open up initial public offerings (IPOs) to neglected retail buyers, Bloomberg reported on Monday (Feb. 22).

The three trading platforms urge the government to consult on retail buyers gaining access to IPOs, saying the Treasury should consider a regulatory obligation to include them.

The platforms are encouraging boards, executives and advisers of companies considering IPOs to make sure that some of their offerings are open to individual investors.

“For too long, U.K. listings have been the preserve of financial institutions and we urge you to consider the rights of retail shareholders in relation to IPOs,” Andy Bell, Chris Hill and Richard Wilson, the chief executive officers at AJ Bell, Hargreaves Lansdown and Interactive Investor, respectively, wrote in a Feb. 18 letter to the U.K. Economic Secretary to the Treasury John Glen, according to Bloomberg.

Between October 2017 and October 2020, day traders were excluded from 93 percent of London floats, according to the executives.

The move to include smaller investors was born out of a full U.K. market including companies like bootmaker Dr. Martens and greeting card platform Moonpig that have seen over 17 percent jumps in debut sessions after opening their share selling exclusively to institutional funds.

Large London IPOs have tended to leave individual investors out, Bloomberg writes, but smaller offerings have often relied on retail demand. London’s inaugural marijuana listings have tended to focus on that aspect. And, it could be changing now as companies such as PensionBee look to give customers options to be shareholders as the company plans to float on the London Stock Exchange.

Robinhood is also considering selling shares directly to users if it ends up holding an IPO. That would also be an unusual move as retail investors don’t usually participate in IPOs at the offering price. Robinhood could potentially go public very soon.