Rapid Micro Biosystems, Inc.'s (NASDAQ:RPID) last week's 10% decline must have disappointed private equity firms who have a significant stake

Key Insights

• Significant control over Rapid Micro Biosystems by private equity firms implies that the general public has more power to influence management and governance-related decisions
• A total of 7 investors have a majority stake in the company with 52% ownership
• Institutional ownership in Rapid Micro Biosystems is 16%

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To get a sense of who is truly in control of Rapid Micro Biosystems, Inc. (NASDAQ:RPID), it is important to understand the ownership structure of the business. We can see that private equity firms own the lion's share in the company with 43% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).

As market cap fell to US$148m last week, private equity firms would have faced the highest losses than any other shareholder groups of the company.

Let's delve deeper into each type of owner of Rapid Micro Biosystems, beginning with the chart below.

See our latest analysis for Rapid Micro Biosystems

What Does The Institutional Ownership Tell Us About Rapid Micro Biosystems?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

As you can see, institutional investors have a fair amount of stake in Rapid Micro Biosystems. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Rapid Micro Biosystems' earnings history below. Of course, the future is what really matters.

Hedge funds don't have many shares in Rapid Micro Biosystems. Bain Capital Life Sciences Investors, LLC is currently the largest shareholder, with 19% of shares outstanding. In comparison, the second and third largest shareholders hold about 11% and 8.0% of the stock. Additionally, the company's CEO Robert Spignesi directly holds 1.1% of the total shares outstanding.

We did some more digging and found that 7 of the top shareholders account for roughly 52% of the register, implying that along with larger shareholders, there are a few smaller shareholders, thereby balancing out each others interests somewhat.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of Rapid Micro Biosystems

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

Insider ownership is positive when it signals leadership are thinking like the true owners of the company. However, high insider ownership can also give immense power to a small group within the company. This can be negative in some circumstances.

Our most recent data indicates that insiders own some shares in Rapid Micro Biosystems, Inc.. As individuals, the insiders collectively own US$3.7m worth of the US$148m company. It is good to see some investment by insiders, but we usually like to see higher insider holdings. It might be worth checking if those insiders have been buying.

General Public Ownership

The general public, who are usually individual investors, hold a 38% stake in Rapid Micro Biosystems. While this group can't necessarily call the shots, it can certainly have a real influence on how the company is run.

Private Equity Ownership

With a stake of 43%, private equity firms could influence the Rapid Micro Biosystems board. Some might like this, because private equity are sometimes activists who hold management accountable. But other times, private equity is selling out, having taking the company public.

Next Steps:

I find it very interesting to look at who exactly owns a company. But to truly gain insight, we need to consider other information, too. Be aware that Rapid Micro Biosystems is showing 2 warning signs in our investment analysis , you should know about...

Ultimately the future is most important. You can access this free report on analyst forecasts for the company.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

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