Let savers hold a real stake in future growth
THIS week marks a milestone i n the history of the UK’s financial markets – the celebration of AIM’s 20th anniversary.
On June 19, 1995, London Stock Exchange l aunched AIM, a new market f or ambitious growing businesses.
It opened with just ten companies and an aggregate value of £82million.
Two decades on and AIM is the world’s most successful and established market for growth companies. More than 3,500 UK and internat i onal companies have floated on the market, raising nearly £90billion.
It has been a tremendous success story for Britain, boosting access to equity finance for growth businesses that continue to be central to innovating and creating new jobs across the UK.
Throughout its history, AIM has also engaged private investors with investing in shares – a foundation it continues to build on.
London Stock Exchange has long campaigned to broaden access to capital markets for private investors. Most recently, we successfully called for AIM shares to be eligible for ISAs and for the abolition of stamp duty on all growth company shares. Alongside the Government’s recently delivered pension reforms, these changes mean individuals have greater freedom than ever before over their personal investments.
These bold measures reflect strong momentum to improve the saving and investment landscape for private investors.
Government, stock markets and business must continue to work together, though, as more must be done to increase opportunities, build trust in the capital markets and to keep the UK’s global financial markets thriving.
For capitalism to become popular again, we must offer ordinary citizens the opportunity to take a stake in some of the UK’s fastest growing and dynamic businesses.
That’s why we’re calling on the Government in its upcoming Budget to facilitate greater private investor participation in IPOs, which so galvanised individuals to take part in the wave of privatisations of the 1980s.
The Government recognises the enormous possi- bilities in this area, highlighted by the strong private investor uptake in Royal Mail’s IPO i n 2013 and, encouragingly, the recent announcement to allow individual investors to participate in the privatisation of Lloyds Banking Group.
Instead of the preserve of large privatisations, this opportunity should be the norm for almost all new companies floating on London Stock Exchange, helping to build a new popular capitalism in Britain.
Following recent reforms to annuities, people need to be aware of the options available to them outside of traditional savings products and shares. For example, more needs to be done to create a deeper culture of retail bond ownership, an area where we lag far behind many European countries.
In 2010, London Stock Exchange l aunched the UK’s first private investor bond market, the Order Book for Retail Bonds, offering companies the opportunity to issue debt, in denominations as small as £100, making it accessible to private investors on a regulated and transparent market.
Despite strong take-up by companies, I believe we are only scratching the surface of what might be possible: in Italy, private investors regularly trade bonds worth £1.5bn every day.
There are two ways to expand opportunities for private investors in this area.
FI RSTLY, with the Government taking the lead by issuing gilts for the retail market – in other words, borrowing from the public rather than financial institutions.
This is a successful programme throughout much of Europe already.
And secondly, we’re asking the Government to encourage businesses to adopt employee bond schemes, issuing them in accessible sizes along similar principles to employee share schemes.
Greater pension and investment freedom is coming to the UK. As AIM has helped connect thousands of smaller companies to a thriving market, its 20th anniversary is the right time to make sure we now make every effort to connect debt and equity markets to the millions of savers and investors across Britain.