Are we starting to see a break in the small-cap financing stagnation of the last two years? Possibly. But don’t expect it to be a long-lasting phenomenon.
Since the beginning of May, the growth companies have raised around £270 million in new investment.
That may not seem like a huge amount, but it represents a rebound when you consider that a total of £228 million was raised in IPO and follow-on financing in the first quarter.
This market revival is expected to be short-lived as pent-up supply explodes ahead of the general election.
Since the beginning of May, the growth companies have raised around £270 million in new investment.
The prevailing opinion in the Square Mile is that the taps will be turned off after the vote and as London approaches the dog days of summer.
And don’t think the last six weeks have been a period of pure joy.
Companies have been forced to accept deep discounts to complete some major fundraisings and investors have been asked to endure significant dilution, just as retail platforms such as REX and Primary Bid have attempted to mitigate the latter issue.
For those who were not lucky enough to refill the coffers, it has been difficult, and for some it is already too late.
Active Energy Group (down 63 per cent) said it intends to delist its AIM listing and enter voluntary liquidation after failing to receive acceptable bids for its CoalSwitch business.
R&Q Insurance (at 97 percent off) is following a similar path, while metallurgical coal mine owner Bens Creek exited the business two weeks ago.
Returning to the broader market, the AIM All-Share was in something of an early summer holding pattern, as it lost 2.35 points, or 0.3 percent, to trade at 774.75 on Friday.
It underperformed its benchmark index, the FTSE 100, which rose 1.3 per cent to 8,252.07, albeit on modest volumes.
How is it possible that a polling company does not meet its objectives during a general election? Well, that’s a question that investors YouGov will ask after the group sounded the profit alert on Thursday, causing a 45 percent drop in the company’s market value.
“Casual YouGov watchers might assume the company would enjoy a bumper period during the election, but its polling operation makes a relatively modest contribution to the group’s revenue,” said Russ Mold of fund platform AJ Bell.
‘The data analysis aspect is more important and this is where the company is struggling. The company invested to achieve an expected growth acceleration in the second half of its financial year, which, as usual, did not materialize.’
The fun and games continue in Kibo Energy (a decrease of 37 percent). This week it unveiled a simplified restructuring plan which involves raising £340,000 per 0.01 share per year and appointing major shareholder Clive Roberts to the board.
It replaces a previous plan which involved raising £500,000 and hiring natural resources veteran James Parsons as a non-executive.
Up 172 percent and the big winner of the week is longboat power which will shift its focus to South East Asia after selling its stake in its Norwegian oil and gas joint venture, earning around £2m in the process.
He signed off by saying that exploration in Norway favors “a shrinking group of very large companies.”
Ringing the changes in the boardroom Cap-XXthe supercapacitor specialist, certainly had the desired effect on the shares, which more than doubled.
Among a series of non-executive appointments was that of Dr Graham Cooley, who transformed ITM Energy from microcap to hydrogen energy storage unicorn (although ITM has since given up some of those stellar gains).
Bradda head lithium (up 41 per cent) has enjoyed a decent run following a promising set of drilling results from its Nevada Basin Project, which it is confident will generate a £2.4 million payout from partner Lithium Royalty.
Finally, Alfa FMCone of AIM’s most senior members, appears set to stand down after its board gave its approval to a £626m bid from private equity group Bridgepoint.
Ken Fry, chairman of the fund management consultancy firm, said the offer “recognises the quality and value of the business and represents an opportunity for Alpha FMC shareholders to realize their full investment”.
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