- Public company members’ body calls for British Business Bank to broaden its remit and build a smallcap portfolio
- Allocating just 4% of the BBB’s £25.6bn capacity into sub-£100m stocks would directly bridge a funding gap for many and indirectly drive valuations higher for many more
- Strategic move would align with the Government’s ongoing commitment to reform UK capital markets and channelling capital into growth companies
The QCA calls for the British Business Bank, the UK’s economic development bank, to get behind the UK’s community of smallcap companies.
In a landmark research report, Banking on Britain, it calls for the BBB to assemble a £1 billion portfolio of smallcap investments, bridging funding gaps for many and indirectly driving valuations higher for many more.
Following expansion, the BBB has financial capacity of £25.6 billion and is deploying around £2.5 billion a year, but all of that in private companies, not public.
The QCA calculates that a small allocation of 4% of capacity would have a material effect on hundreds of scaling smallcaps, which operate in innovative, fast-growing sectors right across the UK.
Many experience a funding gap, where start-up reliefs tail off and before institutional interest takes up the baton. The proposed move would broaden market liquidity and improve price discovery for smaller companies, as well as energise the IPO pipeline. Maintaining a share quote is a proven anchor to the UK, ensuring jobs and intellectual property are more likely to remain here.
“The British Business Bank has been a very welcome addition to the UK funding landscape since its creation in 2014,” said James Ashton, Chief Executive of the Quoted Companies Alliance.
“And yet with a mission to encourage smaller businesses to start, scale and stay in the UK, it should not be absent from one very visible and valuable portion of the British economy: small, stock-market quoted companies.
“We believe this is an oversight that should be addressed, given the government’s continued focus on reforming the UK capital markets, including moves to channel in capital from pensions and retail investors.”
