Welcome to our PrimaryBid 101 guide. In this PrimaryBid reviews post, we’ll be covering everything you need to know about this fintech platform – what it is, how it works, and how it can benefit you.
PrimaryBid is a platform that allows retail investors to access new share issues from some of the UK’s biggest companies. By using PrimaryBid, you can invest in IPOs (Initial Public Offerings) and other share issues at the same time as institutional investors, and without paying any extra fees.
We hope that this guide will give you a better understanding of how PrimaryBid works and how it can be used to make money on your investments.
What Is An IPO?
An IPO, or initial public offering, is when a company sells shares of stock to the public for the first time. This can be a great way for a company to raise money to grow and expand their business. For investors, an IPO can be a great opportunity to get in on the ground floor of a new company with the potential for big rewards.
However, there is also risk involved, as any investment carries the potential for loss. Before investing in an IPO, it’s important to do your research and understand the risks involved.
The Issue With IPOs And Public Fundraising
Have you ever seen that a company has filed for an IPO (Initial Public Offering)? Or a company was fundraising through offering discounted share placings. Wished you could invest at discounted rates but had no option to? This is because they are usually reserved only for big institutional investors. They give little consideration to the everyday investor.
Wouldn’t you like to take part in these fundraisings on the same favourable terms as the big banks and investment houses? Luckily for investors there is now a solution to this issue. With a platform called PrimaryBid which helps to put the smaller investor on an equal footing to the big players.
It is a free to use fintech platform connecting individual investors with public companies of all sizes looking to raise capital.
Sometimes companies raise capital by way of a share placing where they sell new shares. Smaller investors often don’t get to take part in these placings on the same terms as big institutional investors. These are the large investment banks and asset management companies. Large investors get the option to purchase shares in the company at a favourable price before the shares begin trading on a stock exchange.
Often once these new shares begin trading publicly for the first time on a stock exchange, buyer frenzy takes hold, share prices surge and sensible investors are priced out. This is particularly common with popular technology stocks.
As well as the company valuation there are also trading fees and taxes that you have to take into account when purchasing shares. All of this can put the smaller investor at a great disadvantage and price you out of the market. This is where PrimaryBid comes in.
So What Is PrimaryBid?
PrimaryBid is a financial technology platform that connects publicly listed companies with individual investors when raising capital. Their mission statement is to ‘enhance fairness, inclusivity and transparency in capital markets’.
They have a partnership with the London Stock Exchange and Euronext to help individual investors participate in UK capital markets. The FCA (Financial Conduct Authority) regulates them.
The platform can be used to invest in stocks, funds and bond issues. This can include currently listed companies looking to raise additional capital by issuing discounted shares. Or companies going public for the first time, allowing you to invest in IPOs.
The company is continuing to grow and is backed by major tech investment companies including SoftBank.
Who Can Use PrimaryBid?
Until recently PrimaryBid was only available in the UK but has since launched in France as well. At present only residents of the UK and France can use the platform to invest. There are expansion plans in place to launch in other countries in future, with preparations in place to connect with EU financial partners to open up to a wider investor base.
How Does PrimaryBid Work?
When a company raises funds through PrimaryBid, the details will be available to investors on the website and app.
If you decide to subscribe to an issue then there is a very simple process to follow. Basically you pay for the shares via debit card on PrimaryBid and add details of your broker. PrimaryBid then transfer the shares to your broker account. We will explain in more detail below.
Firstly create a free PrimaryBid account. Once you have created your account you will need to go to your profile. From here, add your broker details where you want any shares transferred to.
When logged in you are able to see the dashboard which displays all the latest and recently closed offers. You can see this in in the screenshot below.
You can see the ticker symbol of the company, the sector it operates in, the price of the offer and any discount to the current market price.
If you find one that interests you then you can click on it to view further information. From here you can view the investment prospectus. This document outline details of why the company is raising capital and what purpose it intends to use it for.
You then decide whether or not to invest base on this information. All share offers are on the exact same terms as major investors, making it fair for everybody. You can sign up to email alerts on new offers and there is also an app available.
Subscribing To An Offer On PrimaryBid
This is a simple process. Once you have found a placing you would like to subscribe to, click the subscribe to offer button. Just enter the amount of shares you want to purchase and then complete the payment process by debit card.
There will usually be a minimum value you must subscribe for which can be as low as £100. So you don’t need to be wealthy to take part. You will receive an email confirmation of your subscription.
Once the date for subscription is closed you will receive another email detailing your allotment of shares. It will also advise the date your shares will be transferred to your broker and when they will begin trading.
Sometimes when there is high demand, offers will become oversubscribed. This means they could be scaled back and you will receive less shares than you intended to originally buy. If this occurs you are always refunded the difference in price. You only ever pay for the shares you receive.
Note: You cannot transfer your shares directly into an ISA or SIPP account. This is due to HMRC restrictions, they can only transfer into a general investment account.
What Types Of Companies Can I Invest In?
A large amount of companies raising capital through PrimaryBid are smaller AIM companies. AIM is the Alternative Investment Market in the UK.
Although increasingly a number of larger FTSE 100 and FTSE 250 listed companies are using the platform. They include Compass Group, Ocado, Aston Martin and Taylor Wimpey. These are some of the largest listed companies in the UK.
In addition to share placings, there are an increasing number of companies placing their bonds through the platform along with several new investment trusts and specialist funds.
Are There Any Charges?
There are absolutely no commission fees or charges for individuals using PrimaryBid. The company issuing the share placing is charged a fee for the proceeds they raise through the site. This is how PrimaryBid makes money. This fee is not passed on to the subscriber.
As well as not having to pay any commission fee you are also exempt from paying any Stamp Duty Reserve Tax. Usually when you purchase shares listed on the UK premium market such as the FTSE 100, a 0.5% fee called Stamp Duty Reserve Tax is applied (this tax is not applicable to shares traded on AIM markets). You are exempt from this charge when subscribing to new shares through the platform. It is free, simple and fair.
Conclusion – Should I Use PrimaryBid?
Many of our team members have been using PrimaryBid for several years now, taking place in dozens of subscriptions. The whole process is seamless and we would thoroughly recommend them to any small investor.
One final point to note. They also have an open letter on their website addressed to the boards and management teams of all the UK’s listed companies. This is to help protect individual shareholder rights. If you are a UK investor we would encourage you to read and sign this. It will help level the playing field with the big institutions and make a fairer environment for smaller investors. You can find it here.
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