A British technology company that has helped retail investors access billions of pounds of corporate cash calls during the COVID-19 pandemic will this week unveil a fundraising of its own that will catapult it into the top echelons of UK fintech start-ups.
Sky News has learnt that PrimaryBid will announce on Monday that it has secured $ 50m (£38m) of new equity from new shareholders including the London Stock Exchange Group (LSE), OMERS Ventures and Fidelity International Strategic Ventures.
The deal will be a landmark one for PrimaryBid, which has become a prominent player in London’s equity markets this year as scores of listed companies have raced to shore up their balance sheets because of the coronavirus crisis.
One insider described the funding round as a major vote of confidence in PrimaryBid and its chief executive, Anand Sambasivan.
PrimaryBid, which was founded in 2016, uses an app to combine stock orders from small investors, aggregating them into one substantial application.
Its profile has soared during the pandemic, against a backdrop of growing corporate governance pressure on blue-chip companies to enfranchise their retail investor bases, particularly as virtual annual meetings have meant many companies have evaded the usual level of scrutiny from small shareholders this year.
The fintech’s big breakthrough came in May when Compass Group, the FTSE-100 catering giant, chose it to run the retail component of its £2bn share placing – one of the largest such equity fundraisings to have been announced this year.
Sky News revealed the LSE’s likely participation in the funding round in June.
PrimaryBid already has a commercial agreement with the London exchange, struck last November, which involves the two businesses working together to improve the digital infrastructure required for individual investors to access public share offerings.
The LSE’s decision to become a shareholder in the company underlines the progress it has made in becoming an established part of the UK’s capital markets landscape.
PrimaryBid has also been involved in smaller capital-raisings for dozens of companies, including the online grocer Ocado and SSP Group, the transport food concessions operator behind the Ritazza brand.
The company’s explosive growth has been aided by shrewd marketing, such as an open letter it published in April – signed by leading City figures – calling for listed company bosses to accommodate retail investors when raising capital.
The letter was triggered by concerns that ordinary savers were being short-changed by being denied the chance to participate in heavily discounted share sales, with their pain compounded after seeing the value of their stock portfolios shrink during the market downturn.
It was signed by the likes of Anne Richards, Fidelity International’s chief executive, and Peter Hargreaves, a co-founder of the retail investment platform Hargreaves Lansdown.
Retail investors directly own 13.5% of the UK equity market, equating to holdings worth roughly £420bn, according to ONS data from 2018.
PrimaryBid was assisted by changes to the pre-emption rules at the start of the crisis, enabling companies to increase the amount of money they could raise without having to go through protracted shareholder approval processes.
In addition to conventional corporate fundraisings, the fintech has broadened its transactional services to include a so-called ‘chairman’s list’, which it ran to enable access to the initial public offering of The Hut Group’s parent company.
It also ran an employee enfranchisement offering for Taylor Wimpey, the housebuilder, alongside a wider fundraising.
The company is expected to use the proceeds of its Series B funding round to target selective international expansion in Europe, where it has an exclusive commercial agreement with Euronext across nine countries including France and the Netherlands.
It will also use the money to expand its team in the UK and forge closer links with other key market intermediaries.
Existing investors include Hambro Perks, while others such as Pentech and Outward VC have also backed the latest funding round, according to insiders.
PrimaryBid’s previous fundraising saw it secure £7m last year.
The company declined to comment on Sunday.