Future Government flotations should align investment limits with investors’ ISA allocations, WMA and Peel Hunt Survey shows

The private investor’s experience of the Royal Mail flotation last month offers lessons for the forthcoming sales of more Government assets, a survey of the UK’s wealth managers reveals today.

Any possible cut-off for private investors, beyond which they receive no shares, should be stipulated in advance and should reflect the annual stocks-and-shares ISA limit for private investors, the survey by the Wealth Management Association and Peel Hunt shows. 

As the Government prepares to offer the public shares in the state-supported banks and other assets, the survey of wealth management by the Wealth Management Association and Peel Hunt LLP looked at the significant interest among the UK public for involvement in flotations and the potential for fostering an equity ownership culture in the UK. 

Other key findings include: although the flotation process generally went well and public demand for the issue was large, there was frustration that the overall allocation for private investors was not higher; different classes of retail investors (discretionary, advisory and execution-only) were treated differently, so that many retail clients such as trusts and charities were not provided allocations; wealth management firms had to make a trade off between helping to ensure the widest participation and the commercial reality of the cost and time of doing so. 

Today’s report follows the publication in May this year of a WMA/Peel Hunt survey which demonstrated the strong belief that active private investor participation could become an integral part of a vibrant and fully functioning UK market. For a hard copy of the report, contact Luke Simpson at [email protected]