What Is PrimaryBid And How Does It Work?

If you invest in stocks and shares you may also wish to invest in IPOs and other company fundraising events. These are usually only available to institutional investors and not individuals, until now. PrimaryBid is a free to use platform that is empowering the smaller investor. In this post we will be taking a look at PrimaryBid, how it works and who it is suitable for.

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.

You have probably seen with a lot of IPOs, when the shares begin trading publicly for the first time there is a high demand and the share price surges. 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.

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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.

Use the platform to invest in stocks, funds and bond issues.

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.

Please join our newsletter to be updated when PrimaryBid launches in your country.

What Is PrimaryBid?
What Is PrimaryBid?

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.

How does PrimaryBid work?
How does PrimaryBid work?

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.

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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.

Companies raising capital
Companies raising capital
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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.

Hopefully you will have found this post useful. Please join our newsletter to keep up to date with the latest news.

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