RetailBook: Why We Invested

By Johnnie Martin, Senior Associate at Augmentum Fintech

Augmentum is delighted to be leading a £4.5m round into RetailBook

When we listed Augmentum on the London Stock Exchange in 2018, a key driving force behind our decision was our desire to promote greater democratisation and access to the venture capital asset class. This rationale is entirely congruent with RetailBook’s raison d’être to provide retail investors access to some of the most compelling investment opportunities, typically reserved only for institutions.

Operating via established retail investment platforms, RetailBook allows retail investors to participate in IPOs, follow-on placings and bond offerings on the same terms as institutional investors.

We have maintained a close relationship with the RetailBook team over a number of years from their inception within Peel Hunt and followed closely as they spun out and began to carve a path for themselves as the platform of choice for enabling retail participation. It was therefore a highly compelling opportunity for us to take up when we were presented the opportunity to invest in this round, and help drive the company to the next level.

Aaqib Mirza, Co-CEO of RetailBook, commented, “This fundraise allows us to execute our growth strategy and continue our journey of retail investor empowerment… Strategic expansion through the hire of a team with unique expertise and an unrivalled track-record has delivered exactly what we forecast, increasing our product set to include a new Treasury-bill service that has already raised record amounts from retail investors.”

Read more about why we invested below

Through the last decade, retail investors have been well served when it comes to participating in secondary public market investing. Neo-brokers such as Freetrade, Nutmeg, and our own former portfolio company, interactive investor, have democratised the asset class with low-cost direct investment solutions and slick digital experiences.

However, despite this, the ability for retail to participate in primary transactions has been somewhat limited. Hampered by a regulatory regime that was not built to promote diverse participation, it was simply too easy for issuers to ignore retail investors when raising capital. This environment is rapidly starting to change.

The growth and reform agenda has been clear

The UK Capital Markets are changing. Since Lord Hill’s review in 2020, there have been sweeping changes across the wider market. The new Labour Government has sought to double down on these reforms, helping to reaffirm and accelerate initiatives including:

• Overhauls of the UK Prospectus Rules and Listing Rules
• Updates to the UK Corporate Governance Code
• Systematic changes for the financial services sector as set out in the Edinburgh reforms
• Updates to ISA rules
• Mansion House Compact

Only this week, the government announced the updated Mansion House Accord which seeks to unlock £50bn of investment into the UK economy. While it is focussed primarily on private markets there will be clear benefits to public markets in parallel. This action demonstrates a recognition that the withdrawal of Pension funds from the UK public markets is unsustainable. Indeed over the last 25 years, allocation into UK equities by pension funds has fallen from 50% to only 4.4% today.

Augmentum welcomes these changes that will touch on many aspects of both public and private markets, from rebalancing the post-BREXIT regulatory environment to be on par with Europe, to seeking to promote increased liquidity by unlocking pools of capital from pension funds.

There are many benefits from these reforms that should help fire up the UK economy and promote significant growth across industries. For retail investors in particular, these proposals represent a significant step towards making the prospectus regime more accessible and less burdensome for issuers, while also creating new opportunities for retail investors to participate in both fixed income and equities markets.

A rising tide raises all ships

The potential impact of increased retail participation to the market is significant. Not only does it empower individuals to build wealth and engage more directly with the companies they believe in, but it also injects greater liquidity and diversification into the market.

We firmly believe that increased retail participation in what was largely an inaccessible asset class will benefit the entire capital markets ecosystem. Retail has the potential to unlock significant capital that will increase the liquidity available to UK based issuers, as well as helping to invigorate a more inclusive and dynamic market environment.

RetailBook is helping to change this paradigm, acting as the crucial bridge to connect issuers, investment banks and retail investors via existing investment platforms. Despite a period of suppressed capital raising, over the last year, RetailBook has provided retail investor access to the UK’s two largest IPOs, Applied Nutrition and Raspberry Pi, and generated record Treasury-bill demand demonstrating the pull from the market.

Backing the right team

A key element to becoming the conduit for retail participation in public markets is the connectivity of the team across all aspects of the capital markets ecosystem, spanning from lawyers to bankers and company CEOs to brokerage firms. More than ever, backing the right team is essential.

We therefore view the recent news that RetailBook had made the hires of James Deal — formerly head of the UK and a co-founder of PrimaryBid, along with eight of his former colleagues, as highly strategic and accretive. They bring a complementary skill set to the strong team that had already been assembled by Co-CEO Aaqib Mirza. In total, the new team has experience executing over 350 retail transactions across both debt and equity markets in the UK and Europe and will help drive RetailBook towards their ambition of comprehensive retail inclusion in capital markets.

Unlocking the potential

We have been highly impressed by the vision and ambition of the RetailBook team. This, combined with deep industry networks and best in class technology, positions them well to capitalise on the opportunity that will continue to present itself as equity markets open more fully in the coming years.

Augmentum CEO Tim Levene commented “We’ve had a relationship with the RetailBook team for some time, and their work to democratise investment access directly reflects Augmentum’s core mantra. With recent market reforms focused on enhancing UK market liquidity and the government’s emphasis on unlocking diverse capital pools, RetailBook is poised to play a crucial role. Their excellent team, strong network, and best-in-class technology will enable them to become the key channel for retail participation in public markets.”

James Deal, Co-CEO of RetailBook, added “We are delighted to welcome Augmentum and look forward to utilising their extensive expertise and network in the fintech sector. Our goal remains the delivery of comprehensive public inclusion. Retail investors are a crucial component of vibrant capital markets and we are excited by the pipeline of truly exceptional companies that are considering London as their listing venue.”

Augmentum looks forward to joining existing investors Peel Hunt, Jefferies, Rothschild & Co, and Hargreaves Lansdown in supporting the next stage of RetailBook’s growth, which will see the company focus on expanding its product across new asset classes, growing its platform capabilities, and forging new partnerships with retail brokerage platforms.

Learn more about the Augmentum portfolio here.