Derek Pain: Rivington tempts me to look on the Plus side
No Pain, No Gain
Saturday 27 March 2010
Rivington Street Holdings is challenging to become the Plus share market's most active constituent. The news flow of many companies traded on the fringe platform is, at best, rather thin, and is often not many more than half a dozen announcements a year. But so far in 2010, this bustling finance and media group has posted 18 developments on the Plus news screen. And, I suspect, many more will appear during the coming months.
Some of the bulletins have been routine, such as the exercise of share options. Others have included an upbeat trading statement, takeover action, a proposed change of domicile, and even details of a blaze that destroyed Rivington's City offices. Paradoxically, the group also enjoyed a touch of luck. Although its headquarters went up in smoke, it was able, within hours, to relocate to the nearby office of a research company it had just acquired. So trading continued with only the tiniest disruption. The group was fully insured. It hopes that the premises it intends to acquire this year will be more cost effective than the fire-damaged office.
Rivington, specialising in small caps, is largely the creation of its chief executive Tom Winnifrith, 42, a former City reporter. It started with an online tip sheet, t1ps.com; now it embraces what used to be called merchant banking, providing corporate services largely to AIM and Plus companies, as well as public and investor relations, fund management (four funds handling about £20m) and market research. In addition, its online interests have grown to cover a range of financial and investment services. The original tip sheet is still going strong.
Other interests include the Master Investor conference and exhibition, due to be held next month at the Business Design Centre in Islington, north London. Some 100 companies are taking part and speakers include serial investors Jim Mellon, Nigel Wray and fund manager Mark Slater (son of the legendary Jim). The stockbroker JP Jenkins is another Rivington activity. The firm takes in a matched bargains market aimed at unquoted but public companies. About 30 shares are traded and more are expected to join. AIM delistings are helping to swell the ranks.
Other interests will be added. Besides seeking to expand its finance and media operations, Rivington is planning to venture into unrelated fields by buying distressed companies that, it believes, can be revitalised. The group dates back to 2000 when t1ps.com was launched. It obtained a Plus presence through a merger with Commodity Watch, another internet investment player.
With its shares about 30p, it is capitalised at only £12m. Yet it appears to be on something of a roll. Profits, in the first half of its current year, are more than a third higher and the group expresses "real confidence" about this year's prospects. Its most recent acquisition – two research businesses acquired from the AIM-traded IQ Holdings – are likely to make an increasing profits contribution as the year progresses. Cash will also be returned to shareholders, not by traditional dividends but via share tender offers, starting this year. Up to £100,000 is earmarked for the initial tender, and shares buy-backs are also planned.
Like many other companies, Rivington is proposing a move overseas –well, at least to the more tax-friendly Isle of Man. A one-for-one share exchange into a new Isle of Man domiciled company is planned.
Mr Winnifrith will switch his residence to the island (his London home is up for sale) and three Manx residents of distinction will become directors of the new holding company. All trading operations will remain in London. Getting from the Isle of Man to the City should take only two hours and 50 minutes – a shorter journey than some England-based commuters endure, he observes.
Rivington is one Plus company that has no intention of switching over to the AIM market. Cost is one factor. An AIM presence is likely to require £400,000 a year, and Plus about £30,000, so Mr Winnifrith says the group is happy to stay on the fringe.
I am contemplating adding another Plus-traded share to the No Pain, No Gain portfolio. Bluehone, another small cap specialist, is under observation. Rivington is another candidate. As I mentioned last week, I am anxious to avoid the portfolio becoming too exposed to Plus. Probably one more Plus share and a Footsie stock should provide the necessary balance.
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