Quoted companies have not always embraced retail investors, but this report reveals some interesting trends that suggest this may be changing. Helped by self-investment retirement schemes and easy-to-use internet platforms, share ownership among the retail investor community is rising and businesses are taking notice. It is gratifying that these investors, which made up 37% of AIM ownership in 2020, are being reappraised as an important contributor to the capital raising process. They too can help companies to obtain finance, grow and spread wealth across society.
In particular, small and mid-cap companies can obtain much needed liquidity from retail investors as they follow a different time horizon to many funds whose shares may well be held by a small group of institutional investors who seldom trade.
This report, produced in conjunction with Hardman & Co, has found that there has been a pronounced shift in attitudes towards how companies view retail investors. It gathers evidence of the growing number of events, as well as other forms of engagement, that companies are putting on to increase their visibility among this group. As a rare positive to emerge from the Covid-19 pandemic, levels of engagement increased exponentially between 2019 and 2021. Video conferencing has become a fact of life and connecting with the smallest retail investor is no harder than communicating with the largest pension fund. During the first half of 2022, this trend continues, with a record number of engagements. Even better news is the suggestion that greater retail engagement drives liquidity, which has become a precious commodity following the Woodford collapse – particularly for smaller stocks.
The report is not only compelling in terms of its findings, but also provides useful information on how companies can improve their engagement.