It took a crisis to remember the value of public markets.
Pre-Covid the trend was apparent.
Companies were staying private for longer.
There was an unlimited pot of money to draw from and eye-watering valuations were creating instant paper millionaires.
Investment rounds were going into the E, F and Gs. The only real concern was a fear that we were running out of letters in the alphabet.
Even retail investors were getting in on the action. Everyone wanted to be part of the “private revolution”.
Savings were going into funding the next big start up instead of boring listed equities, funds or ETFs.
Public markets were being brushed aside for this new, sexier alternative.
This took all but three months to reverse.
The crisis
Private companies are now in dire straits. Funding has dried up. LPs are reneging on their commitments.
The government has intervened in an unprecedented way and it is not nearly enough.
A taskforce called The Recapitalisation Group was recently set up to clean up this mess.
Quietly in the background public markets are thriving. In this world the opposite is true: companies are raising money at will and investors are fighting for their share of the allocation.
The message from private and public investors highlights this stark contrast. The former expects companies to cut costs and soldier on in the hope for a V-shaped recovery. The latter is actively supporting companies to raise early and in large size.
The proof is in the pudding. In the last few weeks, UK listed companies have raised over £7 billion of equity and £100 billion in debt capital across over 100 financings.
The fluidity of the UK’s public markets has been astounding.
The ecosystem coordinated swiftly to adjust rules such as pre-emption guidance to speed up the funding process.
Incredibly, the only real government intervention needed here is to make sure all investors can get their fair share!
At PrimaryBid, we represent retail investors. An open letter we wrote calling for the protection of their participation rights in fundraisings received extraordinary support.
It was signed by major business leaders and thousands more from the general public who are passionate about backing UK plc.
The response was immediate. Compass Group recently became the first Ftse 100 company to include a retail offer alongside its accelerated £2bn placing.
It is clear that UK PLCs from AIM to Ftse 100 care about retail investors. They now have the tools to enfranchise them.
Indeed, the public markets are undergoing a retail renaissance.
UK’s online platforms are reporting a huge surge in activity from both existing clients and new account openings.
