Sid is Listening - 17 million interested in Government share sales

Tuesday, October 06, 2009

New research has shown that more than 17 million UK adults would be interested in buying the Government’s stakes in ‘well-known companies’ if they were sold in a share offer in which retail investor interest was encouraged.   16.5 million would be interested in buying shares in the ‘state banks’.

The survey, conducted last month by Opinium for leading financial PR group M: Communications, shows that there is a clear appetite for a new Government sell-off; post a General Election, with people from across the political spectrum keen to consider investing.

The research, which used many of the same questions that were developed to model demand in the large Government share offers in the UK and across Europe in the 1980s and 1990s, also looked at the legacy of the previous privatisation programme.

For the media, politicians and bankers privatisation might remain “top of mind”, but more than two in five adults in the UK have no spontaneous recall of the earlier privatisations. 

Of the 57% who do, most have a mixed view of its success. One group is seen as having benefited more than any other through the sales – the retail investors who bought the shares – and one group as having missed out – the taxpayer. “However, as nearly all potential retail buyers of government-owned bank shares are taxpayers, that dynamic might potentially work to the advantage of any share sale. It may be that taxpayers choose to invest in such offerings in order to take a direct financial interest as shareholders, rather than an indirect one as a taxpayer”. So says Kevin Soady, M:’s market research director.   Soady, who played a central role in many of the large international privatisations and share sales of the 80s and 90s, points to three other important findings in the research.

• The first is that there are now 4.25 million active private shareholders in the UK, who expect to invest during the coming 12 months*. "This is a significant number and should encourage not only the promoters of large-scale government share sales, but also private equity owners and investment banks who are planning major IPOs over the next 12-18 months”, says Soady. “The message from private investors seems to be – we’re here…don’t ignore us”.
   
• This interest is despite the fact that almost two thirds of private investors view shares as a risky investment.  And fewer than one-in-three active investors believes the stockmarket has performed well, whereas the market is up 12.5% this year to the end of September and 21% in the last quarter", says Soady.  “Every time investors turn on the TV or pick up a newspaper it would appear they are confronted with relentlessly bad news about the market, the banks and the economy. Whereas the current numbers are far more positive.”
   
• The most powerful result is the percentage of the general public, including those not currently owning shares, who would be interested in buying shares in any future government sell-off. One third (36%) of adults would be interested in buying shares in such an exercise.  The number falls only slightly (to 34%) for one of the “state banks” if a new Government decides to look at a sale in which retail investment was encouraged. “This represents more than 16 million people, with a clear majority of the UK’s 11 million direct retail shareholders interested and ready”, notes Soady.
  

“There has been a considerable amount of comment about whether a new wave of retail share offers might be an option for a new Government.  This research demonstrates that although the privatisation label may have had its time, the UK public could and would expect to play a central role in any share offers in the future”, said Soady.

* active shareholders defined as someone who has bought or sold shares in the last 12 months and expects to transact in the coming 12 months

Research methodology: Online poll of 2003 British adults aged 18+ conducted by Opinium on behalf of M:Communications between 14-17 September 2009.  Data weighted to naturally representative criteria