Derek Pain: Democracy in action is such a refreshing thing, even if it isn't fair to all
No Pain, No Gain
Saturday 07 August 2010
I have often condemned private share placings as inequable exercises that disadvantage small shareholders and shame the City. Invariably, only a privileged few, including directors, are invited to buy the new shares, often well below the then ruling stock market price.
It can be a highly lucrative exercise for those who take part. But the vast majority of shareholders are left out in the cold, merely envious onlookers.
So I applaud the recent move by little Manx Financial, running Conister, the Isle of Man's independent bank, which celebrates its 75th anniversary this year. The company needed to raise £1.9m. It was unable to conduct a private placing and decided to launch a one-for-three open offer at 9p a share. Small shareholders, deemed as those with less than 0.5 per cent of the capital, were given priority. The issue was comfortably oversubscribed. And the whole exercise – in effect a rights issue – cost about £90,000, demolishing claims that such cash raising excursions are too expensive.
Although the Manx exercise was not expensive, it did take longer to complete than most placings. The whole operation lasted more than eight weeks, although a mix up at the company's registrars prolonged the offer by some two weeks. Defenders of placings say they are the cheapest and quickest method of raising cash. Manx, headed by the entrepreneur Jim Mellon, is one company prepared to consider small shareholders and has struck a blow for their welfare. Its experience underlines that only businesses in a desperate rush to raise extra cash can justify adopting the placing method rather than open-to-all rights issues or open offers.
It could be argued that placings allow companies to reduce the size of their shareholder bases and consequently save cash. I recall some directors taking such a dislike to modest investments that they attempted to block or buy them out on the pretence that they increased the bill for maintaining share registers. But the stock market is supposed to be a democracy with equal rights for all. I realise that is not strictly true; the machinations in the City and the influence of major investors make a nonsense of any suggestion of equality. Still, placings are a blatant example of ingrained favouritism.
My imagination could be running riot but I get the impression that nowadays we are witnessing much sharper share movements, with no immediately apparent explanations. Maybe it is a reflection of the tense atmosphere that appears to exist in the stock market. It could also indicate that insider trading is more prevalent than ever. Unexplained swings are particularly frequent among small caps. Yet the fringe Plus Quoted market does not often feature wild gyrations. It enjoys something of a comatose reputation. I have discussed the problems facing the owner, Plus Markets Group, on a number of occasions. Possibilities that must be considered are that a sale of the Plus Quoted market occurs; or, calamitously, that it is discontinued.
I gather vague talks between PMG shareholders – and other interested parties – have taken place about the future of Plus Quoted. Quite unintentionally, the London Stock Exchange has provided an escape route for any disillusioned constituent. Under pressure from Brussels, the LSE has been forced to introduce more relaxed requirements for fully-listed companies. Already one Plus member, Aviation, is contemplating taking advantage of the new rules. Its shares have been on Plus for nearly four years and are one of the market's success stories, more than doubling to 58p in the past year. The company, which leases aircraft to airlines, is capitalised at £14.5m.
The LSE's junior market – the Alternative Investment Market (AIM) – has attracted three Plus shares in past weeks and could well win more converts. Another possible refuge for Plus constituents is the Channel Islands Stock Exchange, which handles approaching 200 securities. And there is also the JP Jenkins market for unquoted shares. It contains more than 30 constituents, ranging from Convivial London Pubs, with eight outlets, to Sheffield United Football Club. The Jenkins exercise has benefited from Aim delistings.
I don't think Plus Quoted will disappear. Despite heavy losses, PMG is not short of cash with, at the last count, £10.7m in the bank. It is striving – I think successfully – to recapture its old exuberance but its low share price of about 2p indicates City scepticism.
- 1 Rihanna's Met Gala dress took one Chinese woman 2 years to make, was reduced to omelette meme in 2 seconds
- 2 Qataris pledge to expand Canary Wharf
- 3 #JeSuisEd: People share photos of themselves eating awkwardly in solidarity with Labour leader
- 4 Women think Irish men are the sexiest, survey finds
- 5 Florida couple forced to register as sex offenders for having sex on public beach
In defence of liberal democracy
General Election 2015: Post-election 'shambles' looms as 70 per cent of voters say SNP 'should not be able to veto UK government policies'
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
General election live: SNP suspends two members for disrupting Labour rally
General election live: Booths open at 7am across the country on polling day
iJobs Money & Business
£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£27 - 35k + Bonus + Benefits: Guru Careers: A Management Accountant is needed ...
£40-50k + Benefits.: Guru Careers: A Project Manager / Business Analyst is nee...
Day In a Page
Set over three storeys, this unusual two-bedroom townhouse has many character features including high ceilings, arched windows, exposed beams and original church doors.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house