F&C calls for virile small firms market

FOREIGN & Colonial Ventures would like to see the establishment of a virile market for smaller companies, similar to Nasdaq in the US, but fears this development will be blocked by the vested interests of the Stock Exchange, writes Paul Durman.

James Nelson, managing director of F&C Ventures, said that although he doubted that the Unlisted Securities Market should continue in its present form, he would be 'very backward in bringing about anything that restricts smaller companies' access to public capital'. The Stock Exchange is reviewing the future of the USM and is expected to axe it because of signs of declining interest.

Mr Nelson said it would be 'churlish' to close the USM when interest in smaller companies was picking up sharply. He queried whether the Stock Exchange was the right body to run a smaller companies exchange: 'Are they best equipped to sort out pounds 5m capitalisation companies at the same time as pounds 5bn companies?'

Mr Nelson was speaking as Foreign & Colonial Enterprise Trust reported a 10 per cent rise in its dividend to 0.44p a share. Net assets rose by more than 20 per cent last year, against a 14.8 per cent rise in the FTA All-share index and 3.2 per cent rise in the Hoare Govett smaller companies index.

The investment trust's most successful disposal was the US flotation of Olicom, a Danish computer software and hardware firm. The pounds 63m trust realised pounds 4.1m and retains a stake worth pounds 11.2m.

Some write-downs were necessary on the UK unlisted portfolio, the largest being pounds 1.6m of a pounds 4.9m investment. Independent Insurance, where F&C Enterprise has its third-largest investment, is planning to come to the market this year. Mr Nelson welcomed the revival of the new-issue market.