It takes companies much longer than before to raise money via the stock exchange. The large availability of money from venture investors, so-called private equity, is the reason for this. However, this trend can increase inequality in society, thinks British asset manager Schroders.
Because companies can find so much private money, especially people who already have a lot of money benefit from substantial returns in the growth phase of a company. For small investors, much smaller returns remain after the IPO. The difference between the ‘haves’ and ‘have-nots’ is getting bigger all the time, Schroders says.
The asset manager believes that the increasingly complex stock market rules and the high costs associated with an IPO also play a role in the decision of companies to accept money from venture investors. According to Schroders, something needs to be done about this. Investing in matters such as real estate, infrastructure and private equity should also become easier for small investors.