"No cake for retail investors" – top stockbroker slams IPO process

A TOP stockbroker has claimed that retail investors aren’t getting a fair share of the cake when companies float on the stock market.

Veteran Yorkshire stockbroker Keith Loudon, senior partner at Redmayne-Bentley, has hit out at the lack of opportunities for retail investors, saying more should be done to encourage investment in initial public offerings and listings.

His comments come following the news that well-known cafe chain Patisserie Valerie is the latest company that will not be offering shares to the general public when it floats on London’s junior Alternative Investment Market (AIM) at the end of next month, a stock market listing that could value it at around £170m.

Mr Loudon said there was “no cake” for retail investors.

“I have been a satisfied customer of Patisserie Valerie since they came to Leeds. How sad that retail investors, including clients, are excluded from the offer for sale. The FCA is failing in allowing a quote on the stock exchange, without the opportunity for retail investors to participate,” said Loudon.

He also expressed his concern that Card Factory’s IPO will also only be open to institutional investors.

“For some time now, there has been a growing trend amongst companies coming to the market that caused me some concerned. Over the last 12 months, there have been a number of IPOs that have effectively excluded the retail investor from applying for shares and getting in at the ground level. Only Royal Mail, Merlin Entertainments, Infinis Energy and Pets at Home have proved to be the exception,” he added.

“Despite this apparent snub, companies have had privileged access to the market and benefited from the advantage of a recognised price. And to add insult to injury, on the occasions where professional investors were able to apply, they were allocated nothing.”

Loudon said that such practice can not be in the best interest of the stock market, where a wide spread of share holders is an advantage.

“It has also occurred to me that the virtual exclusion of private retail investors is not in our interests within the UK political arena, or the European arena,” he said.

“There is a theory that of every new issue that comes to market, 20-25% should be reserved for the general public. This is something, perhaps, for those who govern the current system to look at, for the benefit of the individual, institution and market.”

 

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