An army of “Sids” – the name coined by advertising agency BMP for the private investors in British Gas – helped to keep 20 per cent of the UK stock market in the hands of small savers in the late 1980s. But the chance of a quick profit, and the losses of Black Monday, meant they failed to reverse the decline in private share ownership that began in the 1960s.

Figures from the National Audit Office show 4.5m people applied for the 425.5m British Gas shares offered to the public at £1.35 a share. About one in three were successful, creating 1.5m private shareholders in the company. By the end of the 1980s – after the privatisations of BT, BP, British Airways and BAA – individuals directly owned 20.3 per cent of UK equities, worth £104bn, according to the Office for National Statistics.

But initial public enthusiasm did not bring about the widening of share ownership envisioned by Margaret Thatcher, then prime minister. Although later water and electricity privatisations briefly lifted holdings back to 1980s levels, they had dropped to 16 per cent by the millennium.

Capita Registrars suggests ownership hit an all-time low in May 2010, before recovering to 12 per cent in August 2011. Back in 1963, private investors had been majority shareholders in UK-listed companies, owning 54 per cent.

Brokers who recall the “Tell Sid” ad campaign to promote privatisation issues believe investors’ view was too short-term. John Douthwaite, chief executive of Simply Stockbroking, says: “Most people saw an easy way to make a bit of cash – you could put in £200 and make £100. There were huge volumes traded on the first day.” But a year after British Gas floated, the Black Monday crash of October 19 1987 led many of the remaining investors to sell. “When the market dropped 20 per cent in a day, it came as a shock. They had only seen prices going one way until then.”

Those who held on would have seen a strong recovery. An allocation of 100 British Gas shares cost £135 at issue, but would now be worth £1,686 in shares in the demerged Centrica – a 12-fold rise in 25 years. However, BT, BP, BAA and British Airways all generated lower capital returns than the FTSE 100. Backers of Railtrack did worse: after the company collapsed, investors who paid 380p per share received only 262.5p back after a lengthy court battle.

Additional research by Yann Morrell Y Alcover

Copyright The Financial Times Limited 2024. All rights reserved.
Reuse this content (opens in new window) CommentsJump to comments section

Follow the topics in this article

Comments