Crowdcube, the UK crowdfunding business, will launch a platform for retail investors to participate in initial public offerings to tap into expected new demand as government ministers consider plans to reduce the institutional dominance of London listings.
The group, which channels retail investment into early-stage companies, will offer a service for public as well as private share sales from this summer.
It is recruiting a capital markets team to work with companies and banks on planned IPOs. There has been a sharp increase in London flotations this year after companies delayed plans during the worst months of the pandemic in 2020.
The UK government has backed a review of the London market by Lord Jonathan Hill, the former EU commissioner, which made a series of recommendations to encourage greater retail participation in IPOs and streamline the process of raising capital to more easily involve such investors.
Darren Westlake, co-founder and chief executive of Crowdcube, said the sizes of private businesses raising money on its platform had already increased sharply. Crowdcube has previously helped to raise money for businesses such as Monzo and Revolut.
“We are doing big raises for later-stage companies so this feels like a small step,” he added.
Numis, the London broker which owns a small stake in Crowdcube, said it would use the platform for appropriate IPOs in the future.
Ross Mitchinson, co-chief executive at Numis, said Crowdcube “has the right tools and domain knowledge to make retail access to IPOs simple and hugely rewarding for both investors and the listing companies themselves”.
He added: “Retail investors are understandably seeking greater access to IPOs. There is strong desire from customers to have a role in their favourite brands’ public futures.”
Westlake said the group was already talking to companies on potential IPOs, with a focus on the sorts of consumer businesses that tend to be keen to open fundraising to their customers.
A number of companies already offer access to some IPOs for retail investors, including PrimaryBid, which is part-owned by the London Stock Exchange. PrimaryBid has overseen retail offers for IPOs including those of Deliveroo and PensionBee.
Crowdcube had attempted this year to merge with rival Seedrs but the move was blocked by the UK competition watchdog on the grounds it would restrict competition in a still small crowdfunding market.
Westlake said the company had registered four profitable quarters for the first time in its history, and was making plans for future growth.
These include opening a platform for “secondary” share sales to enable a market for investors to trade in and out of companies. Crowdcube would also expand in Europe this year, he said, given changes in EU regulations that would make it easier to offer crowdfunding for start-ups in the region.