If last year was the worst for London’s small-cap new listings scene, it looks like 2023 could be just as bad for AIM.
However, an unreported trend last year was that the numbers of initial public offerings in the market Aquis Stock Exchange (AQSE) last year eclipsed its junior rival in the market.
And, with an offering it says is more suited to small businesses and the entrepreneurs who run them, Aquis Exchange CEO Alasdair Haynes reported this week that momentum was “building” with a strong pipeline of new arrived.
Numbers are not the be-all and end-all, but over the 18 months since the start of 2022, AQSE welcomed 27 newcomers, while London Stock Exchange AIM saw 18 or 15 newcomers, depending.
how you look at it.
After 22 arrivals last year, the first half has seen five IPOs for AQSE, although AIM has so far attracted six new listings after 12 (or nine) the previous year.
Aquis Exchange CEO Alasdair Haynes (pictured) this week reported “building momentum” with a strong pipeline of newcomers.
In Aquis’ half-year results last week, Haynes said it reflected the general slowdown in IPO activity across the market amid challenging economic conditions, but said they were all well supported by investors.
“Let’s be honest, it’s well documented how atrocious the market is right now – probably the worst in living memory, although I’m old enough to remember the 1970s,” Haynes tells Proactive.
“These are low-volume products and raising capital is extremely difficult,” he acknowledges.
However, he highlighted continued momentum from its outperformance of AIM last year and said AQSE has a “very strong portfolio”, with high growth and “new economy” companies keen to join.
Aquis, the parent company of AQSE, as well as the pan-European exchange Aquis Markets (7th largest in Europe), and also a provider of technology and exchange spaces (of which five of its seven contracts generate revenue so far), is itself listed on AIM.
Haynes said listing on the junior wing of the LSE since 2018 has further opened his eyes to what smaller companies needed from a listing.
‘When we went public five years ago, I discovered it had a corporate governance code the same as BP.
‘Now we have 25 employees, they have hundreds of thousands of employees, is that really proportionate?
“And we found that the whole process was too time-consuming and too expensive.”
One of the reasons AQSE has attracted more IPOs in the past 18 months than AIM is that, Haynes says, it provides rules and requirements for small listed companies that are “proportionate and appropriate.”
This is not a difference in standards with AIM or the main LSE market, he says.
“Our standards are not lower, but we have made life easier for entrepreneurs to reach the market.
This includes creating templates for intake documents, shortening the process for accountants, simpler other documentation, and not having a designated advisor or Nomad structure.
“So I think we found a lot of companies that in the past might have turned to our direct competitor on the LSE, and we certainly consider that for growing companies AQSE is an ideal market.”
For men and women who run SMEs, he said the big difference is how they spend their time.
‘One of the main things that entrepreneurs like is to have a clear vision of where they are going and they want to spend most of their time doing what they do well, which is running their business and not spending 90% of the time looking for money.’
He says Aquis also acts more as a training ground for companies and bosses new to the public markets, similar to the education system.
Newcomers at an earlier stage in their growth can join the Access segment, which has lower disclosure requirements, and when they are more established they can move to Apex rules when they are ready, which requires greater governance and other requirements. on market capitalization, free float, market makers and trading history.
These are rules refined by lessons learned at the LSE, he says, and that message to employers “has gone through quite well and not only did we beat AIM last year but we also increased the revenue of our issuers.”
To read more small cap news, click here www.proactiveinvestors.co.uk
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