November 2024

Having lived through the IPO of Applied Nutrition as Chairman, how do you feel about the UK markets and how open they are for business?

There’s a clear appetite from UK-focused fund managers to back a strong founder-led success story like Applied Nutrition. However, one challenge we faced was the net outflow of funds facing most UK fund managers, which has pushed them to be cautious about new investments. This caution was compounded by the timing of our IPO, which took place shortly before both the UK budget and the US election.

It is testament to founder, Tom Ryder, and the team’s success during the investor roadshow that we attracted so many blue-ribbon, long-only fund managers. While the UK stock market remains undervalued, its future competitiveness will rely on sustained economic and political stability. The new Labour government must support this through pro-business and pro-growth policies. There were mixed views as to whether the recent budget will deliver on this and prove to be a platform for the future success of UK PLC.

Applied Nutrition bucked the trend by including retail investors in their IPO. What are the advantages of including retail investors?

Including retail investors in IPOs brings several benefits, such as broadening the investor base, increasing share liquidity and fostering brand loyalty, especially for consumer-oriented companies. It also promotes financial inclusion, allowing individuals to participate in wealth creation directly and to invest in brands they’re passionate about.

Could the government or the regulator do more to encourage this?

Quite simply, yes. Boards and their advisors should be obligated to consider the interests of retail investors when listing or raising funds. The current regulatory environment makes it easy to overlook retail investors, even though the FCA mandates that all shareholders be treated equally. This requirement is often ignored during these critical financial milestones.

Retail investors frequently feel like an afterthought. Credit should be given to companies like Retail Book and Primary Bid, which have developed platforms to facilitate the inclusion of retail investors in such transactions.

Much like the CEO of Applied Nutrition, you’re an entrepreneur at heart, having founded AJ Bell in 1995. What advice would you give entrepreneurs on their PLC journey?

Advice varies depending on where they are in their entrepreneurial journey. In the build-and-grow phase, my advice is to have a clear purpose, vision, and values. It’s not always about creating something brand new—sometimes, you just need to do it better than anyone else. Believe in your proposition and speak about it with enthusiasm and passion.

In later stages of the entrepreneurial journey, my advice is more functional but equally crucial. With Tom and the senior team at Applied Nutrition, I emphasised that the business should be in the right place from a governance standpoint before going public. We brought in advisors to carry out an IPO readiness review almost a year in advance to identify areas for improvement which also helped to demystify the IPO process for the team.

My advice ahead of an IPO is don’t be greedy; the market will reward you over time if you deliver as expected. It’s essential not to over promise, to deliver on your promises and most importantly meet your numbers.

What is the most interesting thing you’ve watched recently?

The recent Labour budget was fascinating to watch unfold, especially after Labour's election promises of being pro-business and pro-growth. I understood the need to raise taxes, increase spending, and borrow more. However, the constant reference to a £22 billion fiscal ‘black hole’ felt repetitive, almost mechanical, and, ironically, less convincing the more it was emphasised. I’ve never experienced a budget that has generated such prolonged and impassioned discussion. Removing 100% inheritance tax relief from farmers and entrepreneurs felt like a politically charged move and one that may come to define this budget in the public memory. Ditto removing the VAT exemption on private school fees. Meanwhile, the hike in Employer’s National Insurance not only breached Labour’s own manifesto promise but will likely lead to job losses and smaller pay rises for workers down the line.

I fear for the retail and hospitality sector and watch out for a flurry of such businesses failing once Christmas is out of the way. The increase to the minimum wage and the reduction in rates relief will be too much to bear for many of these businesses, when piled on top of the increased National Insurance costs.

On capital gains tax (CGT), the increase wasn’t as severe as many feared, though the mere anticipation probably spurred extensive pre-budget planning, raising billions in the process. And while I don’t oppose taxing unused pension assets on death, inheritance tax remains an incredibly inefficient mechanism for doing so. Taxing the over 75s on unused pension assets at rates of 67% for an additional tax rate payer and 64% for a higher rate tax payer risks destabilising the pension system itself. The introduction of a private jet passenger tax was another pernicious choice — not because it can’t be justified, but because it feels like it started life as a budget speech joke on Sunak that was reverse engineered into tax policy. Some elements of the budget were necessary and well-positioned, yet it feels like this is one of those budgets whose consequences will echo for years to come.

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Please note: The views and opinions expressed in this interview are those of the individual financial professional(s) and do not necessarily reflect the views or opinions of Alma Strategic. These insights are provided for informational purposes only and may not be relevant at the time of reading, as market conditions can change rapidly. The information provided should not be construed as investment advice or a recommendation to buy, sell, or hold any financial product or security. Individuals should conduct their own research and consult with a qualified financial advisor before making any investment decisions. Alma Strategic disclaims any responsibility for the accuracy or completeness of the information provided in this interview.