Levelling the playing field: How FinTech is democratising access to AIM share placings

January 11th, 2017 / / Featured Insights

By Dave Mutton, COO PrimaryBid

Did you know that more than 60% of all Alternative Investment Market (AIM) shares are owned by private investors?  However, these shares are predominantly purchased on the secondary market and not via a new share placing. This lack of access given to individual investors to participate in placings has long been a frustration for both high net worth and smaller investors, compounded by missing out on the typical discounted prices offered in a placing. However, these frustrations are being overcome by new fintech funding platforms that enable investors to gain access to equity capital raises of AIM-listed companies.

Previously, from the investor perspective, AIM was not delivering value in this area.  Even though AIM companies themselves have a desire to engage with all of their shareholders, the market seemed destined to maintain the status quo and to focus just on institutional investors when raising funds.

Why is this?  The industry has been frustrated by the lack of an economically efficient method to engage with these important private investors.  The traditional book building process is built around individual networks, subject to regulatory restrictions on inside information and is typically a stop start process, dependent on corporate timetables and share price movements.  Making regular dialogue with large numbers of private investors problematic and inefficient.

With primary share issues on AIM totalling more than £4bn in 2016, it’s surprising that a solution to this problem had not been found sooner.

The heart of this problem is the need for effective communication and transaction processes. Engaging and enabling investors to discover new investment opportunities, whilst delivering a viable solution to brokers and issuers, encouraging them to allow participation by individual investors.

PrimaryBid saw an opportunity to fill this gap and built a multi-channel service with website and smartphone app, utilising technology to allow private investors to participate in a way that regulation and market structure has made difficult in the past.

Ease of use and speed of access are the key differentiators.  Investors can be contacted, visit the site or app, where automated systems register and verify new users, allowing them to quickly participate in a transaction within minutes.

With £30m raised via PrimaryBid’s platform last year, it’s clear that there is demand for this type of FinTech solution and the company will continue to work with companies and brokers, to complement existing fundraising efforts and add incremental demand to fundraisings on AIM.

 

About Primary Bid 

PrimaryBid is an online platform which provides private investors the opportunity to create their own placings on their own terms.