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NatWest 2024 share sale suspended – what investors need to know

The NatWest 2024 retail share sale has been suspended because of the 2024 UK General Election. Here’s what we can learn from past privatisations.
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Important information - This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

The NatWest share sale, announced by Chancellor Jeremy Hunt, has been put on ice, due to the 2024 General Election campaign.

The 2024 Spring Budget set out that a sale would take place this summer at the earliest, subject to supportive market conditions and achieving value for money for the taxpayer.

Schemes like this have the power to encourage new investors, so many hope this will be revisited by whoever wins the election.

Past privatisation schemes brought in newcomers and super-charged investing habits for many novice shareholders. But others refrained from dipping their toe further into the market, and heightened interest in the stock market ebbed away during following years.

Although the NatWest retail share sale is now on hold, it’s still a possibility in the future.

While we wait to find out more on what’s next for the scheme, it’s worth looking at the investment lessons from privatisations before – including the famous Tell Sid campaign promoting the British Gas share sale.

This article isn’t personal advice, if you’re not sure if an investment’s right for you, seek advice. All investments and any income they produce can rise and fall in value so you could get back less than you invest. Remember, ISA and tax rules can change, and any benefits depend on individual circumstances.

Figures from a survey of 2,000 people by Opinium for HL in April 2024, unless otherwise stated.

Privatisations sparked shareholding surge

Between the end of the 1970s and when Margaret Thatcher was replaced as prime minister, more than 40 state-owned businesses were privatised.

For the majority of those under 50, you might find it hard to recall a time when many of Britain’s largest companies were state-owned.

A few of the first sales of state-owned businesses included early sales like British Aerospace and Cable and Wireless in 1981. Both completed with little fanfare.

Enthusiasm built from here within government as it became a campaign issue in the 1983 election.

This ushered in a wave of privatisations, including BT, BP, British Airways, and Severn Trent Water. These created millions of new shareholders, and shareholding went from being something for just 7% of the population in 1979 to a quarter 10 years later.

It was hoped this shift towards shareholding would accelerate even further, but the percentage of Brits investing directly in the stock market has remained around a quarter.

This compares poorly when compared with the US where shares are held by just under two thirds of Americans. UK households hold less than 4% of their assets in shares, which underperforms when compared internationally, where the French, Danes, Germans and Spanish hold a larger proportion of their assets in shares.

Privatisations – a gateway to investing?

For many of those who took part in privatisation schemes, it did kickstart better investing habits. Those who took advantage of privatisations are more likely to be investors now.

Overall, a quarter of people took part, but just under half of people who currently invest took advantage of the schemes back then. Of the people who bought into a privatisation, a third still hold at least one of the companies they invested in.

Data from our latest survey also showed the higher someone’s income is today, the more likely they were to have participated in the privatisations. This is despite the fact the boom ended more than a decade ago, when their income might have been far lower.

A missed opportunity?

Past privatisation schemes brought in newcomers and super-charged investing habits for many novice shareholders.

However, a big chunk of people, two in five, took advantage of the initial privatisation schemes but then sold up without going further on their investment journey.

To us this is a missed opportunity to help boost future financial resilience, particularly when tax-wrappers like Stocks and Shares ISAs, Junior ISAs and Lifetime ISAs can be used to ringfence investments and help boost returns.

Starting out with a handful of interesting shares and then broadening to a wide portfolio of funds in ISAs can help provide the backbone of long-term financial strategy.

When we eventually get any NatWest share sale, it should be viewed as an opportunity to spread awareness about the importance of diversification, not putting too many eggs in one basket.

Although the FTSE 100 has reached record gains recently, there’s still considerable value in London-listed companies waiting to be unlocked. The number of overseas companies still circulating potential acquisition targets on the London Stock Exchange is an indication that UK assets are considered ‘cheap’ compared to peers overseas.

As always, it’s important to have an eye on the long-term horizon for any investment strategy and there are no guarantees. Past performance isn’t a guide to the future.

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Written by
Susannah Streeter
Susannah Streeter
Head of Money and Markets

Susannah is a key contributor to our content. She follows changes in monetary policy movements and fiscal policies closely to assess the impact on financial markets and economic growth, and has extensive experience in covering technology stocks and the retail sector.

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Article history
Published: 28th May 2024