Derek Pain: AIM low – but Alexander David spots a target
No Pain, No Gain
Saturday 29 November 2008
The AIM market was once the place to be as the small caps enjoyed enviable adulation, investors were happy to splash out on buying the shares, and the stockbroking community felt that it had discovered a new and lucrative share market.
But the credit crunch has derailed the gravy train. Boom times are now a fond memory. Flotations have dried up, and for the first time in the junior market's 13-year history, the number of constituents has fallen, with nearly 100 dropping out this year.
The shares of AIM-listed companies have been savaged even more brutally than those on the main market. Stockbrokers, particularly those with a significant AIM presence, have also suffered as their cash rewards have been eroded and, in some cases, virtually disappeared.
But the current gloom could yield opportunities for the more adventurous. David Scott, chief executive of the newcomer stockbroker Alexander David, is one person who believes that expanding when times are hard could prepare the foundations for when the good times roll.
He is close to bringing his firm to AIM – not via a flotation, but through a reverse takeover. It is merging with AIM-traded Griffin, a small-cap investment and financial services group developed by Stephen Dean, the serial investor, who died shortly after agreeing the deal. Griffin suffered a £1.1m loss at its interim stage.
Michael Hicks, who is 73, will be chairman of the enlarged group. He has been in the City for more than 50 years, starting at a firm called HE Goodison, run by the father of Sir Nicholas Goodison, the former Stock Exchange chairman who masterminded the share-trading "big bang" that swept away centuries of City tradition. "I taught young Nicholas all he knew about broking," Hicks quips.
This week, Griffin shareholders approved the transaction, which also included the £1.2m sale of the group's small-cap (mainly Plus) shareholdings to a company where Dean, who died after a battle with cancer, was involved. The sale improves the merged group's cash position.
Alexander David is involved in private-client and institutional stock-broking. The company is very much a small-cap animal, and in spite of the current gloom continues to exude faith in the junior market's future.
It has a staff of 26, and is one of the few City firms still recruiting. Scott, whose 20 years in the City included spells at the stockbrokers L Messel and Lewis Charles and as director of corporate broking at ING Barings, before helping to launch Alexander David, is keen to develop the group as a rounded City player. Market-making, for example, is a possible extension.
Alexander David, which hopes to obtain FSA approval for the get-together around the middle of next month, has close links with Jarvis Securities, which has a share stake and provides back-office facilities. Andrew Grant, the chief executive of Jarvis, will be a director of the new group.
Scott is under no illusions about the difficult AIM environment his creation faces. He reckons that conditions will remain tough throughout next year. But, he says: "We have opportunities. We are a small, young company without the overheads of some of our much older competitors. We will be well positioned when the market upswing occurs."
In the meantime, he believes, his company will benefit because some AIM advisers are not, in his view, offering a satisfactory service to their client companies.
In addition to the decline in companies with an AIM presence and the fall in the number of recruits, the market has had to contend with some rather disturbing events. Two Chinese companies, for example, appear to have "lost" their top men and their shares have been suspended. And the ability of overseas-based AIM constituents to circumvent general stock-market obligations has surfaced yet again.
For much of its existence AIM could do no wrong, attracting constituents from around the world. Nowadays, almost every share market, wherever it is based, is experiencing difficulties. But lack of liquidity and the parlous state of some of its companies makes AIM particularly vulnerable. Still, if shares fall much further, takeover predators could start bargain-hunting.
Compare with the Independent: See how much you could save by switching credit cards. Compare now
- 1 Fracking is turning the US into a bigger oil producer than Saudi Arabia
- 2 Hells of residence: Inside Macedonia's horrifying student accommodation - where the walls are green and the food is black
- 3 Boy George: Bad karma
- 4 Rachel Canning: US teenager returns home after she tried to sue her parents for child support
- 5 Rampaging elephant smashes up house but then 'saves crying baby trapped under debris'
Katie Hopkins continues campaign to become Britain's most hated talking head with poorly timed Bob Crow tweet
No EU referendum under Labour: Ed Miliband to reveal that vote on membership is ‘unlikely’ in next Parliament if party wins power
Grace Dent: Who cares if she spells it Barraco Barner? Gemma Worrall is more employable than some bookish arts graduate
Ukraine crisis: Russia pledges to 'retaliate against sanctions' as Ukrainian president says Crimea vote will not be recognised
The quiet diplomat: Catherine Ashton - recognised and admired in all the world’s troubled countries, yet ridiculed at home
Fracking is turning the US into a bigger oil producer than Saudi Arabia
iJobs Money & Business
£45000 - £55000 per annum + Bonus and Benefits: Harrington Starr: One of the i...
£57000 - £77000 per annum + Benefits: Pro-Recruitment Group: Top 10 Specialist...
£350 - £450 per day: Harrington Starr: Harrington Starr are currently working ...
£40000 - £60000 per annum: Harrington Starr: Application Support - FIX protoco...
Day In a Page
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village
A secluded seven-bedroom detached house with large private garden, £490,000
A three-bedroom cottage overlooking Sarratt village green with open fires and solid oak floors
A three-bedroom maisonette flat in a Grade I-listed, Georgian townhouse in a sought-after location
A one-bedroom apartment located within a private gated development, north of Turnham Green
Look forward to a brighter future at two-bedroom Sunny Cottages, ideal for Londoners looking to downsize
A three-bedroom red-brick cottage with outbuildings and pretty gardens, £200,000
This three-bedroom flat within a former textile factory spans the corner of the fourth floor and has a balcony
A charming four-bedroom Oxfordshire cottage with oak floors and chunky-beamed ceilings, £465,000
A beautiful one-bed flat in a sought-after portered block, with access to Norland Square communal gardens
A one-bedroom flat within a Sixties school conversion with high-spec design and open-plan kitchen, close to Lambeth North Tube, £435,000
A 17th century four-bedroom house, with open fireplaces, cellar and pool, £600,000
A three-bedroom, coach house with luxury open-plan living space and contemporary breakfast bar
A newly refurbished one-bedroom flat in the heart of Mayfair, close to Grosvenor Square
A charming four-bedroom house overlooking Burleigh Square Park, close to Thorpe Bay
A three-bedroom farmhouse with a large inglenook fireplace and exposed beams
A boutique mews house, set around a central courtyard, with three bedrooms and a private roof terrace
A four-bedroom farm-conversion with three bathrooms and two reception rooms
A two-bedroom detached house with ensuite bathrooms and a sun-drenched decked terrace, £750,000
A modern and spacious two-bedroom, penthouse flat with two bathrooms in a prestigious development
A beautifully renovated five-bedroom terrace with three reception rooms and a courtyard garden, £700,000
A four-bedroom period house which has been extended to provide almost 2,500sq ft of living space, £675,000
A pretty three-bedroom Georgian home with a 22ft drawing room and a master suite with a balcony, £525,000
A substanstial family home with five bedrooms and landscaped gardens in the much sought-after Branksome Park area
A well-presented three-bedroom house with front and rear gardens, close to White City station, £475,000
A handsome five-bedroom house in a sought-after location close to the city centre
A five-bedroom country home with valley views, equestrian stables and 27 acres of land, £725,000
A six-bedroom farm house with separate, detached cottages and 371 acres of land
A two-bedroom cottage with parquet floors, chunky beams and an open fireplace
A three-bedrrom flat with 2,733sq feet of living space, a beautiful private garden and 15 acres of communal grounds
A four-bedroom chalet bungalow with three bathrooms and a spacious garden, £525,000
A two-bedroom flat with an open plan kitchen and two balconies, close to Arsenal station
A Grade II-listed home with six bedrooms, secluded landscaped gardens and views across Hadley Green
A Grade II-listed mansion with two apartments and a cottage, near Gretna Green
A three-bedroom Grade II-listed mews house with vaulted ceilings and roof garden
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield