Delivering democratized investment for AJ Bell

AJ Bell is one of the most innovative investment platforms around, and when it made the decision to float, it wanted to do so in a way that was equally innovative.

Its aim was to 'democratise investing' by becoming the first investment platform of its type to offer its customers – and its people – the chance to buy shares on IPO through AJ Bell's proprietary trading platform. This required us to think, and deliver, differently.

The Challenge

AJ Bell wanted to demonstrate their ambition to "make investing easier" through an IPO process that provided a transparent and modern approach to investing. Pinsent Masons was appointed as lead adviser to AJ Bell for the transaction in March 2018 and devised a process that would enable the client to achieve its aims without falling foul of a new regulatory framework resulting in admission, ahead of the originally timetabled date, in December 2018.

The Solution

This IPO was in the vanguard of transactions to take place after an overhaul of the IPO regime. We had to develop appropriate means to satisfy the regulatory authorities that new regulations were being met, without having a precedent to draw upon and whilst still meeting the client's expectations for clearer, simpler documents. AJ Bell's was one of the first registration documents submitted to the UK Listing Authority for review following the change to the regime.

Further, because shares were being offered via AJ Bell's own platform, the legal team was required to collaborate with the client's digital development team. A slick and engaging online experience was required that equally ensured investors had an appropriate level of information about the investment and attendant risks. This resulted in a paperless retail investment process using the client's own platform - believed to be a first for the market.

In addition, given the pre-float shareholder base (comprised of institutional shareholders, founders, management and employees) the team was also required to make a complex submission to the Takeover Panel in relation to the concert party position, involving close scrutiny of the different relationships and prolonged dialogue with the Panel.

Pinsent Masons project-managed the transaction and engaged with stakeholders throughout the business. This involved collaborating closely not only with the legal function, but also directly with the Board, PR, the website development team and HR. Pinsent Masons therefore took the lead in particular on delivering the Registration Document and Prospectus with input from all stakeholders and other advisers, and understanding and advising on new regulatory requirements, helping the client to recognise and negotiate challenges before they became problems.

A clear example of this ability to foresee and navigate challenges was the recognition early on that, like many fast-growth companies, pre-IPO, AJ Bell had over 150 employee shareholders holding a number of different share classes. Extensive due diligence was conducted using Pinsent Masons' proprietary SmartDelivery technologies to understand the position, which in turn led to a complex share reorganisation which flattened the capital structure, requiring the Pinsent Masons' team to engage with all the employee shareholders to ensure appropriate authorisations were in place to proceed to admission. Further, this entire process was designed with the certain knowledge that the Takeover Panel would ultimately need to be assured that the process was neither counter to regulations nor disadvantageous to new post-IPO shareholders.

The Result

This deal has set numerous precedents, being among the first to take place under the new regime, and the first "paperless" retail investment offered through the client's online investment platform rather than via intermediaries. The aim of 'democratising investment' – articulated in an interview with the Financial Times was achieved against a backdrop of significant volatility arising from Brexit.