On the go: More than two-thirds of investors would like to see greater tax incentives for pension funds and insurance companies to invest in small- and mid-cap companies, according to research by UK investment banking specialist Peel Hunt.
The research shows that 67 per cent of investors and 55 per cent of companies polled by Peel Hunt believe pension funds and insurance firms should be further incentivised to invest in small- and mid-cap companies, with the goal of encouraging more private companies to list on the UK stock market.
The move would be part of a suite of measures designed to remove costs and restrictions preventing small- and mid-sized companies being listed, reflecting a low level of confidence in the future of UK private equity markets.
Only 21 per cent of investors and 8 per cent of companies predicted that the number of companies listed on UK markets will rise in future, with 58 per cent of businesses reporting that excessive regulatory requirements and scrutiny are shrinking markets.
Freeing up pension investments would be one way to reverse that trend, the report stated.
Sixty per cent of companies called for regulators and policymakers to boost the proportion of private investors on the share register by providing these and further incentives.
Easing regulatory burdens was also supported, with 78 per cent of investors and 73 per cent of companies calling for small- and mid-caps to be exempted from Mifid II unbundling requirements.
However, there was somewhat less support for the suggestion that the government might encourage pension funds to weight more heavily in favour of equities.
Though 53 per cent of investors said this was a good idea, only 32 per cent of companies agreed, with the report concluding that “the most attractive stimuli to create greater depth of liquidity are based on tax breaks and incentives”.
