By Simon Jessop
LONDON (Reuters) – Some of the top UK fund managers are demanding that companies respect the rights of retail investors after Britain’s financial regulator relaxed the rules to speed up corporate fund raising in order to weather the coronavirus crisis.
With Britain in lockdown, companies no longer need to approach all existing investors with their plans, to allow them first right of refusal on buying new shares or on seeing their existing stake diluted, so-called pre-emption rights.
This leaves retail investors at a disadvantage, say signatories to a letter including Fidelity International Chief Executive Anne Richards, Schroders fund manager Andy Brough and AJ Bell founder Andy Bell.
“While we recognize the need for businesses to raise equity capital in an expedited fashion, we are concerned that no protections are being afforded to retail investors,” they wrote.
Since the start of March, 2.7 billion pounds has been raised by companies on deeply discounted terms, with retail investors blocked from taking part, said the coordinator of the letter, PrimaryBid, a technology firm that works with the London Stock Exchange to help retail investors access equity placings.
“We encourage UK PLCs and their boards to protect individual shareholders and employees by respecting their rights to participate alongside the institutional investors, management teams and board members,” the letter said.
Retail investors should be considered a valuable source of funds particularly as, in recent weeks, they have made up around a fifth of the traded volume in the FTSE All Share index, it said.
(Reporting by Simon Jessop; Editing by Alexander Smith)
