Great news. London Stock Exchange Group (LSE.L) chief executive Xavier Rolet thinks that up to 20 per cent of new issues should be made available to private investors.
"Doing so would create some excitement around new issues and give retail investors the chance to make some money," he told The Independent, following the publication of the LSE's 2014 results last week. "At the moment many IPOs end up in the hands of a few of the same institutions." Rolet has already put these views to senior policy makers of all major political parties.
If that sounds like a pitch to democratise the listing process, bear in mind that those comments are neither a pledge nor a roadmap. And judging by LSE's latest results, the company doesn't even need to make such campaigning overtures: in 2014, the company notched up £45m in admission fees from 219 new listings on its markets - the highest number of IPOs since 2007. More broadly, the terms of any book-building process are not controlled by the LSE: any new entrant (and its banks) can choose its equity base (often including those banks), meaning there is no obligation to open the primary market to retail investors.
So is Mr Rolet just paying lip service to the view that most listings are City stitch ups which gift the best prices to a connected few in the Square Mile? Well, yes and no. The LSE has a vested interest in greater numbers of trades of the securities on its markets, and it also wants to encourage all forms of public and private equity financing. This was testified by the launch this week of an LSE report surveying 1,000 successful UK businesses, many of which have benefited from fund-raising as opposed to the "50-year-long fixation on debt as the solution to every company's financial issues".
A number of high-profile IPOs this year have included a retail investor element, suggesting that some companies also want to get retail investors on board from the start. HSS Hire Services Group (HSS) offered a small portion of its shares to retail investors for its IPO earlier this year, as did furniture company DFS Furniture (DFS), which floated this week, and Revolution Bars is also looking to attract retail support for its forthcoming IPO. Booking website Trainline.com was also prepared to offer some of its shares this way before its buyout by private equity group KKR derailed a public listing.
Rolet's comments also come amid the continued rise of crowd-sourcing as an alternative for small companies looking to raise capital. The LSE may not be setting up its own version of Crowdcube any time soon, but it nonetheless sees crowd sourcing as an important part of a "wider and deeper pool of risk capital". Indeed, in recent months several companies have used both the stock exchange and online crowd-sourcing to get retail investors in at the ground floor, such as the ongoing Aim listing of Burgundy vineyard Domaine Chanzy. That fundraising, which is being part-brokered by crowd-funding platform Seedrs, followed the December flotation of buy-to-let property group Mill Residential REIT (MRR), which worked with crowd funder the Syndicate Room to obtain backing from around 40 investors and raise £2.2m.
FinnCap, which acted as broker on the Mill Residential listing, has also launched its own crowd-funding platform to give qualifying investors the chance to participate on terms previously reserved for high net worth individuals. How has it done so far? Head of capital markets Tom Jenkins says the new platform has had lots of enquiries but has so far yielded only a limited number of "IPO-able" opportunities.
One broker who spoke to the IC believes the nascent market for crowd-funded IPOs could be headed for a disaster, if one company is floated at the wrong price or point in the business cycle. "Done right, it's good; done badly it could be dangerous," was the blunt view. The notion that private investors might not be able to properly value a business case may seem patronising to some, but for others there's still comfort in the due diligence standards - and resources - of large investors.
