Crowdcube is reportedly working on an online IPO platform aimed at retail investors, making it a new rival to the London Stock Exchange’s part-owned PrimaryBid.
The crowdfunding firm has so far help private businesses land investment and, according to a report in the Financial Times, it has hired a capital markets team.
Crowdcube plans to enable retail investors to participate in London IPOs.
Stockbroker Numis, a shareholder in Crowdcube, is expected to use the new platform for future appropriate IPO, the FT noted.
It is the latest manoeuvre from Crowdcube which in March saw its proposed merger with crowdfunding rival Seedrs blocked by the Competition and Markets Authority.
Also, it marks a further step in the adoption of crowdfunding for stock market listed companies and the trend toward more ‘open’ IPOs.
Whilst the P in IPO stands for public, real public access has for the most part unavailable. Institutions and brokers have long been gatekeepers in the IPO process and often, even if individual investor can participate through their brokers often minimum investment limits can be prohibitive for the retail-end of the investment community.
This is the niche within which PrimaryBid has been able to grow in recent years.
Founded in 2016 by former Goldman Sachs banker Anand Sambasivan, the company operates as a platform to allow retail investors access to public companies undertaking funding rounds at the same time and the same price as institutional investors.
PrimaryBid notifies its account holders when a company is using its platform to raise funds, offering them a chance to purchase shares using their debit card, which are then allocated into an investment account.
PrimaryBid initially came to prominence at the start of the coronavirus lockdown in 2020, when contract cater Compass Group PLC (LON:CPG) used its app as part of a £2bn share issue. Since then, other large corporates such as Whitbread PLC (LON:WTB), Ocado Group PLC (LON:OCDO), Segro PLC (LON:SGRO) and housebuilder Taylor Wimpey PLC (LON:TW.) have all used the app for a retail offering alongside large equity raises.
In March 2021, PrimayBid notably raised £50mln as part of Deliveroo’s IPO which raised £1bn, set a market value of £7.6bn, and subsequently broke records for all the wrong reasons as shares slumped after the float.