Primary purpose
By CA magazine
27 January 2021
We kick off our new series, The Innovator, by shining the spotlight on PrimaryBid. Growing from 15 people in March 2020 to a team of more than 80 by the year’s end, the company is on a mission to democratise capital markets and rebuild the UK – and global – economy. Co-founder and CFO Kieran D’Silva CA reveals how
Simple, free and fair. That’s how PrimaryBid describes the benefits of investing through its market-first app. A partner of the London Stock Exchange (LSE), the company’s technology-led remit is to connect individual investors with public companies that are raising capital – an investment scenario that was historically only available to institutional investors.
“We really care about democratising capital markets,” says co-founder and CFO Kieran D’Silva CA. “We’re giving retail [individual, non-institutional] investors access to something they didn’t have before and which outperforms the wider market.”
Before the technology that underpins PrimaryBid made this type of fundraising accessible to those smaller investors, big institutional clients had the advantage because of the bureaucratic hurdles of KYC [Know Your Customer] regulations, which put individuals and companies through anti-money-laundering and other identity screening verifications.
Even when listed companies wanted to include their retail shareholders in funding rounds, says D’Silva, the banks wouldn’t allow it due to the time involved in checking thousands of individual investors. For the banks, it wasn’t worth the hassle. And so the way that listed companies accessed fresh capital remained unchanged for decades, with shares routinely offered to institutions at a discount not available to retail investors.
“The capital market process hadn’t changed for 50 years, and we just thought that this is fundamentally unfair and broken,” says D’Silva. “Retail investors want access. Companies want to enfranchise stakeholders, customers, employees, but they can’t. Retail investors are an important source of capital. They might be small individual ticket sizes, but, when aggregated, it’s a huge pool of capital – especially in the current climate. Post-pandemic, we will need to rebuild the economy. Many companies, especially in hospitality and entertainment, are carrying huge amounts of debt. They’ve largely had no revenue for the last eight months of 2020, so they need to rebuild their balance sheets.”
For companies looking for funding to do just that, D’Silva speculates that institutions “may not have deep enough pockets to rebuild all those balance sheets, so retail capital is a really important source of funds. It can help to rebuild both the UK and global economy.”
Although a UK limited company, PrimaryBid has plans to take its platform international in order to “do the right thing”, says D’Silva, to fundamentally change the capital market processes and make them more equitable. “With existing technology, such as push notifications, you can contact millions of investors worldwide at the push of a button. They can then be onboarded in a matter of minutes, undergo anti-money-laundering checks, all with no human intervention.
“It’s all very scalable. Because these kinds of transactions happen very quickly, the process needs to be seamless and the technology allows us to aggregate tens of millions in demand in just a few hours. The technology enables our entire mission.”
Mission possible
D’Silva first started thinking about PrimaryBid early in his career working in investment banks on the sell side, advising FTSE 100 and S&P 500 companies. “We saw the hot deals first-hand,” he says, “with the key issuers only giving discounted share prices to big institutional clients.” He and co-founder and CEO Anand Sambasivan, who worked on the buy side, would invest in companies such as Ocado, follow them online, go to their AGMs and inevitably bump into a retail investor who had been a shareholder since the company’s IPO, but who was excluded from follow-on fundraising and discounted prices.
For casual investors, PrimaryBid offers the assurance and credibility that comes with its partnership with the LSE, and the transparency and ease of transacting D’Silva and his team devised. Ensuring users understand the risks and know their options is “something we think about a lot and it’s why we’re such strong proponents of public equity capital markets. For a company to be listed, it has to be liquid. You can enter and exit when you want and your money isn’t tied up like it would be in a property investment. If you buy one day and want to sell the next, you can.”
But back to that mission to do the right thing for the wider economy. D’Silva believes that having a mission-led business – one that propels positive change – is also a fundamentally good thing for internal culture. “I think it’s something that has really helped us to come together as a team – we’ve grown from 15 people in March to over 80 people at the end of December. And we’re always keen to hear from like-minded people from the capital markets ecosystem who want to join us – when people believe in the mission, they can achieve amazing things.”
Ambition with intention
His journey to entrepreneur started when D’Silva was studying economics at Durham University. He was always entrepreneurial and “set up a couple of small businesses” while still a student. A move into investment banking was his goal, so he pursued his CA qualification, working at EY in the banking capital markets team in London. “I was very fortunate to work with great clients like UBS and Cantor Fitzgerald,” he says, “it was such great training.”
The London stint was followed by a secondment to EY in Bangalore, helping to set up outsourcing teams. D’Silva valued his time at the Big Four firm and the rigorous training that led to his qualification. But investment banking was still calling, so he moved to Citi shortly after qualifying, joining the financial institutions M&A team. “We were advising banks, asset managers and credit card companies on mergers and acquisitions as well as capital raising. We worked closely with the equity markets team doing IPOs and follow-on issuances.” That experience of seeing deals only going to institutional investors planted the seed for PrimaryBid. By then, the iPhone had been out for a few years and both businesses and consumers were seeing the power of mobile technology.
In 2013, D’Silva moved to Darwin Strategic, an investment fund working with AIM-listed companies. Here, he says, he realised there was appetite on both sides of the investment equation to enable access to deals. So Sambasivan set up a fund to do that and D’Silva joined him as CFO to incubate PrimaryBid within the fund.
“We were fortunate that we could prove the concept and use the umbrella regulatory permissions to see if the idea had legs until we decided to spin it out as its own company and raise separate funds,” he says.
After “a fairly linear process with a few zigs and zags along the way”, PrimaryBid was established, soon signing up with both Euronext and the LSE as partners. It did its first FTSE 100 deal in May 2020 and celebrated its hundredth in November 2020. Next comes expansion into France; a refreshing success story in a year when positive news was in short supply – something of which D’Silva is mindful.
“We’ve been very fortunate and aware that our growth is against the backdrop of a global health crisis,” he says. “We all know how lucky we are – there are a lot of very good businesses out there who, through no fault of their own, have not been as fortunate. There’s a huge opportunity in front of us while we’ve got first-mover advantage, which will allow us to scale and set up for global expansion.”
So is this the moment that the entrepreneur in D’Silva overtakes the CFO? “I don’t see those traits as mutually exclusive,” he replies. “The skills you learn as a CA or CFO – forecasting, valuations, building scalable operations – are all key to building a business. Beyond that initial spark of an idea, to build a business and raise funds and be FCA regulated, you need these robust frameworks and practices, which is what you do as both CFO and CA.”
While he recognises the value of his ICAS training, he received recognition in return in 2016, when, aged 29, D’Silva struck gold by winning the Entrepreneurship category of ICAS’ Top 35 CAs Under 35 awards. It was propitious timing, arriving the same year as PrimaryBid’s launch, and due reward for the skills he’d demonstrated as both CA and innovator. “It was just a great endorsement of what we were doing,” he says, “and most importantly we were in the early stages of building the business and raising funds. It was a great stamp of approval and credibility, a big milestone for me.”
Those skills, combined with powerful, reliable technology, have enabled the PrimaryBid team to realise their mission to democratise capital markets. Without the tech, says D’Silva, the fundraising process for listed companies would have stayed the same as it always was: people picking up the phone, finding a handful of institutional investors and raising the money: “That’s the analogue, old-school method that’s been going and going until PrimaryBid came on the scene. Without technology, that’s what would still be happening. It’s only because of technology that we’re able to do what we do – it’s at the core of everything.”