Derek Pain: At last, somebody has spoken up for the little guy over floats

I am delighted that a leading stockbroker has complained about the poor treatment dished out to small investors in the flood of flotations now occupying the City.

In days gone by, we small players were invited to participate in innumerable new issues. Indeed, our interest was considered vital and the degree of subscription was regarded as a measurement of success or failure. There are few such solicitations nowadays, allowing sales to easily exclude the retail investor and concentrate on institutional big guns.

Last month I attacked the appalling way many small investors were ignored. Now Keith Loudon, senior partner at influential private-client stockbroker Redmayne Bentley, has felt compelled to voice his dissatisfaction with the present system.

He has complained to Martin Wheatley, chief executive of the Financial Conduct Authority, describing the block on small investors as "deplorable" and adding that any suggestion they do not understand the new issue game is "arrogant".

Rewarding institutions is less troublesome and possibly less expensive than offering a full-blown, new-issue process. But advisers could be doing a disservice to the floating company. It has not been unusual for newcomers to quickly trade below their issue price. Could such a disappointing result be because of the failure to include small players? Maybe. They are more loyal than institutions. And there is also the possibility they are reluctant to chase shares in the after-market once they have been ignored.

Still, the forthcoming Saga flotation will embrace small investors. Already 700,000 customers have registered interest in the share sale. The over-50s group, which offers holidays, healthcare and insurance, hopes to raise £550m, capitalising the business at £2.2bn. Naturally institutions will be involved. Saga's parent company also owns the AA.

Now to the no pain, no gain portfolio. Spirit Pub Co, a constituent, rolled out interim profits last week. Exceptional charges, much of them relating to a potential VAT payment, hammered the pre-tax figure. But stripped of the largely non-cash items, profits emerged at £22.1m, up 11 per cent. The dividend is increased by 6 per cent to 0.72p a share.

Sales at its 1,219 managed pubs rose by 4.8 per cent with an 8.3 per cent advance in the first four weeks of the following period. The 445 leased pubs enjoyed a 2.6 per cent turnover rise. The leased estate is composed largely of former managed outlets; average net turnover per pub is around £100,000.

The shares were recruited at 42p nearly three years ago. As I write, the price is 79p, having been as high as 87p. They do appear to be stuck in a rut, although trading has been impressive. The broker Numis has put a 110p target on them. I think it's worth sticking with the group.

I am less certain about two of my long-term loss-makers.Animalcare, the veterinary-products group, is, according to researcher Edison, unlikely to obtain the benefits of its switch from low-margin products to more profitable lines until after 2017. It adds: "The current [share] valuation has yet to capture the potential of this approach". But TEG, the environmental group, is looking more promising.

I intend to deal with these two "culprits" in the next few weeks. I am contemplating selling them but have yet to make up my mind.

yourmoney@independent.co.uk

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Training/Learning and Development Coordinator -London

    £28000 - £32000 per annum: Ashdown Group: Training/Learning and Development Co...

    Training Programme Manager (Learning and Development)-London

    £28000 - £32000 per annum + benefits: Ashdown Group: Training Programme Manage...

    .NET Software Developer (.NET, C#, ASP.NET, front-end)

    £30000 - £45000 per annum: Harrington Starr: A Global Financial Service Organi...

    C# Web developer (C#,MVC,ASP.NET,SQL)

    £30000 - £40000 per annum + Bonus+Benefits+Package: Harrington Starr: C# Web d...

    Day In a Page

    A new Russian revolution: Cracks start to appear in Putin’s Kremlin power bloc

    A new Russian revolution

    Cracks start to appear in Putin’s Kremlin power bloc
    Eugene de Kock: Apartheid’s sadistic killer that his country cannot forgive

    Apartheid’s sadistic killer that his country cannot forgive

    The debate rages in South Africa over whether Eugene de Kock should ever be released from jail
    Standing my ground: If sitting is bad for your health, what happens when you stay on your feet for a whole month?

    Standing my ground

    If sitting is bad for your health, what happens when you stay on your feet for a whole month?
    Commonwealth Games 2014: Dai Greene prays for chance to rebuild after injury agony

    Greene prays for chance to rebuild after injury agony

    Welsh hurdler was World, European and Commonwealth champion, but then the injuries crept in
    Israel-Gaza conflict: Secret report helps Israelis to hide facts

    Patrick Cockburn: Secret report helps Israel to hide facts

    The slickness of Israel's spokesmen is rooted in directions set down by pollster Frank Luntz
    The man who dared to go on holiday

    The man who dared to go on holiday

    New York's mayor has taken a vacation - in a nation that has still to enforce paid leave, it caused quite a stir, reports Rupert Cornwell
    Best comedians: How the professionals go about their funny business, from Sarah Millican to Marcus Brigstocke

    Best comedians: How the professionals go about their funny business

    For all those wanting to know how stand-ups keep standing, here are some of the best moments
    The Guest List 2014: Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks

    The Guest List 2014

    Forget the Man Booker longlist, Literary Editor Katy Guest offers her alternative picks
    Jokes on Hollywood: 'With comedy film audiences shrinking, it’s time to move on'

    Jokes on Hollywood

    With comedy film audiences shrinking, it’s time to move on
    It's the best of British art... but not all is on display

    It's the best of British art... but not all is on display

    Voted for by the British public, the artworks on Art Everywhere posters may be the only place where they can be seen
    Critic claims 'I was the inspiration for Blanche DuBois'

    Critic claims 'I was the inspiration for Blanche DuBois'

    Blanche Marvin reveals how Tennessee Williams used her name and an off-the-cuff remark to create an iconic character
    Sometimes it's hard to be a literary novelist

    Sometimes it's hard to be a literary novelist

    Websites offering your ebooks for nothing is only the latest disrespect the modern writer is subjected to, says DJ Taylor
    Edinburgh Fringe 2014: The comedy highlights, from Bridget Christie to Jack Dee

    Edinburgh Fringe 2014

    The comedy highlights, from Bridget Christie to Jack Dee
    Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

    Dame Jenny Abramsky: 'We have to rethink. If not, museums and parks will close'

    The woman stepping down as chair of the Heritage Lottery Fund is worried