The UK company that orchestrated a torrent of retail equity placements for cash-strapped companies during the pandemic is in advanced talks to sell a large stake to the world’s largest tech investor.
Sky News has learned that PrimaryBid is set to finalize details of a $ 150million (£ 110million) funding round that will be led by the second of Japanese giant SoftBank’s Vision funds – which have racked up funds. stakes in companies ranging from Uber to Revolut.
Sources in the city said over the weekend that PrimaryBid’s Series C fundraiser is likely to value the company at more than $ 500million (£ 368million) on a pre-money basis.
This will be another big step for a company that says its goal is to democratize public stock markets by allowing ordinary investors to participate in cash calls from which they are frequently excluded.
The issue became increasingly controversial during the early stages of the COVID-19 crisis, when dozens of London-listed companies demanded money from institutional shareholders to shore up their balance sheets with huge discounts, but no did not allow retail investors to participate.
PrimaryBid’s big breakthrough came when it participated in a £ 1billion stock sale for Compass Group, the catering giant.
It has since become a mainstay of these corporate fundraisers, as well as initial public offerings on the London Stock Market, reflecting the fact that the inclusion of retail is increasingly seen as a governance requirement. business.
Last year PrimaryBid appointed city heavyweight Sir Donald Brydon as chairman with the aim of moving the issue higher on the capital markets agenda.
Sir Donald is a former chairman of the London Stock Exchange Group, which himself became a shareholder of PrimaryBid in a $ 50 million fundraiser in 2020.
Funding from SoftBank’s Vision Fund II will provide PrimaryBid with greater financial strength to continue its international expansion beyond the UK and reflect the global ambitions of Anand Sambasivan, its founder and CEO.
It will also give it access to the vast technological and public market ecosystems in which SoftBank and its founder, Masayoshi Son, sit at the center.
The same vehicle SoftBank this week confirmed a Sky News report that it had acquired a $ 100 million stake in Gousto, the meal kit subscription service.
PrimaryBid’s latest fundraiser will bring the total amount it has raised since its inception in 2016 to over $ 200 million.
Its application combines the stock purchase orders of small investors, aggregating them into one substantial application.
A source said SoftBank’s funding was a validation of its business model of partnering with investment banks instead of bypassing them.
The company’s mission was bolstered by a review led by Lord Hill, the former EU commissioner, who recommended a series of reforms to UK financial markets.
John Glen, the Minister for the City, said last year that the Treasury wanted to “facilitate wider participation in the ownership of state-owned enterprises and remove the disincentives that currently exist for issuing securities to large groups of companies. investors – including retail investors “.
“This will allow a wider range of society to benefit from their growth.
“It will also allow the companies themselves to access a broader investor base, as well as improve the overall functioning of the market by increasing market liquidity,” said Mr. Glen.
PrimaryBid was also helped by changes to preemption rules early in the crisis, allowing companies to increase the amount of money they could raise without having to go through lengthy shareholder approval processes.
The company’s rapid growth has also been aided by astute marketing, such as an open letter it published in April 2020 – signed by prominent figures in the city such as veteran fund management Martin Gilbert – calling on heads of listed companies to welcome retail investors when raising capital.
The letter was sparked by fears that ordinary savers will be denied the opportunity to participate in heavily discounted stock sales, with their pain exacerbated after seeing the value of their stock portfolios decline during the market downturn. at the start of the pandemic.
Retail investors directly own 13.5% of the UK stock market, equivalent to holdings worth around £ 420 billion, according to ONS data from 2018.
Innovation in capital markets is in part driven by the growth of direct-to-consumer investment platforms such as Robinhood in the US, while in Britain fund manager abrdn recently agreed to buy Interactive Investor for £ 1.5 billion.
PrimaryBid’s latest funding round includes other investors, with existing shareholders such as Hambro Perks and OMERS Ventures.
PrimaryBid and SoftBank both declined to comment on Saturday.