Untapped capital: Understanding the retail investor pool is written by The Economist Intelligence Unit and sponsored by PrimaryBid. In-depth interviews with financial market experts were conducted in addition to extensive desk research and data analysis.
Key Findings:
• Europe has witnessed a recovery in retail ownership of listed companies since the 2008 financial crisis. European households own 15.6% of listed shares across EU and UK stock exchanges, up from 13.3% in 2013 and 12.7% in 2007
• Companies and investment banks have traditionally left retail investors out of most initial public offerings (IPOs) and all follow-on share offerings due to regulatory and logistical issues
• Corporate governance best practice encourages companies to include all shareholders, including retail, in follow on share offerings where possible
• Regulators around the world are working to improve retail access to capital markets and to lighten the burden for smaller companies raising funds
• With the growth of passive investment, retail investors are becoming an increasingly important part of the active demand pool for IPOs and follow-on share offerings. More demand raises tension in the book-building process and helps to improve the final share price
• In a financial world dominated by highfrequency trading and quantitative strategies, retail investors are loyal, longterm minded providers of capital and offer vital liquidity for small and mid-cap quoted companies
• Retail investors are especially important shareholders for small and mid-cap companies. For example, they own on average 25.1% of companies listed on London Stock Exchange’s growth market, AIM
• The use of technology by stock exchanges and financial brokerage firms is helping to democratise access to the capital markets for retail investors
The Economist Intelligence Unit would like to thank the following individuals for their time and insights:
• Paul Frankfurt, head of equity blocks, BNP Paribas
• Thomas Kudsk Larsen, head of investor relations, AstraZeneca
• Guillaume Morelli, head of SME listing France, Euronext
• Charlie Walker, head of equity primary markets, London Stock Exchange
• Tim Ward, CEO, Quoted Companies Alliance
• Andrea Wentscher, investor relations manager - retail investors, BASF
