UK broker Peel Hunt has agreed a deal with rivals Rothschild, Numis, Hargreaves Lansdown and Jefferies to create a company that will offer retail investors access to initial public offerings and other listed company fundraisings.
Peel Hunt will relaunch an existing platform, Rex, that allows retail investors to buy into company capital raisings, which are often dominated by or offered exclusively to large institutions.
The separate business, which will be known as RetailBook, will own and operate a deals platform for the new partners, which will have the right to become shareholders alongside Peel Hunt.
The Financial Times revealed in November that Peel Hunt was in talks with rivals to create the new company, which will have its own headquarters and will be staffed independently of the broker.
The move comes as the UK government seeks to change market listing and shareholding rules to encourage investment by British retail investors, which ministers see as a way to both boost company valuations and offer wider access to share ownership.
The UK IPO market slumped last year after investor confidence was hit by the war in the Ukraine, falls in values in the tech sector and fears of recession. But bankers are predicting that the market will recover after the summer on hopes the economic downturn will be less severe than feared.
The new group will compete against existing rivals such as PrimaryBid, which is backed by the London Stock Exchange and SoftBank and already offers retail investors access to IPOs. PrimaryBid last year raised $190mn in an investment round led by SoftBank’s Vision Fund 2 that valued the start-up at about $700mn.
RetailBook still requires approval by the Financial Conduct Authority. Shares in Peel Hunt rose almost 3 per cent on Thursday morning, valuing the broker at about £130mn.
Peel Hunt said that independence was “a prerequisite to Rex asserting itself as the leading industry platform.” The technology developed by Peel Hunt has struggled to gain widespread take-up, according to financial service executives, as banks have been loath to pay a rival or give it access to their clients.
Peel Hunt said that Rex has won market share in recent months, having been mandated on nine completed capital markets transactions since August 2022.
Under the new deal, Hargreaves Lansdown has agreed it will use the new platform exclusively for all suitable offerings to its retail clients until 30 June 2023, while Jefferies, Numis and Rothschild will collaborate with and promote the platform and “it is envisaged that each of Hargreaves Lansdown, Jefferies, Numis and Rothschild & Co will become shareholders in RetailBook”, Peel Hunt said.
Steven Fine, chief executive of Peel Hunt, said: “The growth of Rex has reflected the increasing importance of the retail investor over recent years.”
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