Thousands of investors are clueless about the value of their shares and are trapped in investments they don’t want, as research indicated many companies are failing to properly communicate with shareholders.
According to findings from peer-to-peer trading platform Asset Match, more than a quarter of UK shareholders do not know the current value of the shares they own.
The research, which was based on a survey of 2,000 British adults, also found that 9 per cent of investors feel unable to sell or trade the shares they own in a private company.
According to Asset Match, this equates to more than 600,000 trapped and frustrated investors.
This sense of discontent among shareholders was largely a result of poor transparency and communication from private companies, with 10 per cent of investors never being given the opportunity to discuss options about their shares since making their original investment.
Failure to address this issue will breed further discontent within Britain’s shareholder community Stuart LucasStuart Lucas, co-chief executive of Asset Match, said the research uncovered a “concerning problem” being experienced by shareholders who he claimed are often ignored and pushed to one side.
“There are huge numbers of shareholders in the UK who want to sell their shares but cannot, don’t know how much their shares are actually worth, or wish to invest in other companies but are trapped in their current investments.
“Failure to address this issue will not only breed further discontent within Britain’s shareholder community, but also risks stunting the growth of the private sector by not enabling investors to sell shares and reinvest in the next generation of companies.”
The survey revealed that 16 per cent of UK’s shareholders, which equates to more than a million people, would like to invest in high-growth businesses but cannot because they are unable to sell their existing shares.
Despite the report painting a negative picture of private companies, Mr Lucas pointed out that confidence in the growth of the market appeared to be strong.
Recent findings from IW Capital indicated that 44 per cent of British investors thought Brexit would have a positive impact on their investments.
Yet the Asset Match boss said the difficulty investors have when it comes to cashing in these shares could risk undermining this confidence because shareholders are unable to re-invest into other private businesses.
However, Dan Farrow, director of SBN Wealth Management, was critical about the report.
"So long as the underlying company is liquid, there is no reason why any investor should be ‘trapped’ in a share they don’t want."
He also said there are no excuses to "moan" about disclosure requirements of companies, adding: "With the advent of the internet, there are few excuses for investor ignorance.”
katherine.denham@ft.com
