Finance: Taking AIM at juicier targets

GARY JONES is in a position familiar to many people running small companies quoted on the Alternative Investment Market. His business, an information technology staffing company called SBS Group, has been developing well - making two acquisitions since joining the market two years ago, and on track with plans to build a substantial organisation in the UK, continental Europe and the US - yet its share price is stuck in the doldrums.

The company's stock, which peaked at more than 350p on the back of excitement about the first acquisition and subsequent cash-raising placing, is stuck at about 152p. Mr Jones does point out that this is still 52 per cent above the initial price of exactly a pound. "In normal circumstances, I would consider that a pretty good return," he says.

The problem is that these are not supposed to be normal circumstances. SBS is meant to be the sort of growing business upon which the future prosperity of the country is riding. And, as such, many would expect its share price to reflect better its combination of already-achieved growth and huge potential.

The absence of what might be termed a feel-good factor has been causing soul-searching during AIM's fourth anniversary celebrations. There has been extensive comment about the lack of liquidity in AIM stocks and the resultant lack-lustre share prices.

So the market and its supporters are trying to redress the balance. The recently published third annual "Taking Aim" survey from accountants HLB Kidsons points to a number of "misconceptions" about the market among fast-growing companies considering flotation.

The biggest problem is low turnover of shares, said 59 per cent of respondents. Graham Spooner, Kidsons' director of corporate finance, said the volume of AIM shares traded had increased from 739m in March 1998 to 1.2bn in March this year, and the average number of shares traded per company increased 46 per cent between the first quarter of 1998 and the similar period this year. He said most respondents were attracted by access to funds for more growth.

A 11-year-old company, Sussex-based Bond International Software, entered AIM in 1997. The chief executive Steve Russell, said they spent the first year "getting ourselves sorted out again." But acquisitions are on the agenda because they are considerably easier to achieve once a company is listed. He is also keen to benefit from what he and his colleagues estimate is the pounds 100,000 annual cost of being listed. Mr Russell sees value in being a listed company, regarding it as conferring status and thus being a significant differentiator in a crowded field. As one of the market's better performers - at the end of last week its shares were trading at 107p, compared with an issue price of 65p - Bond has little complaint about its market value. Mr Russell, like SBS's Mr Jones, says there is little problem in attracting investments of pounds 500,000 to pounds 1m, but more difficulty when it comes to tens of thousands. But, where Mr Jones feels it is largely a matter of smaller companies going out of fashion because of a greater emphasis on cautious investment, Mr Russell also points to the effects of the share structures of companies like his.

Five venture capitalist trusts investing for fixed terms are involved in Bond, while "a lot of the shareholders are staff who are in for the long haul", he says. The second survey of AIM published yesterday by Pannell Kerr Forster found that, although the respondents were acutely aware of the problems facing smaller capitalisation companies in terms of investor caution and liquidity, their views "were somewhat more upbeat than the "doom and gloom" in press coverage over the last six months."

PKF - which questioned 144 AIM-listed firms and 17 that moved to the main market last year - says AIM should create and publicise sector indices to help monitor growth and high-income stocks to stimulate investor interest; track the performance of the top 50 performers to profile success; and continue encouraging institutional investment and attracting European finance.

Andrew Swanston, chairman of Methven's, the chain of book shops that operates in affluent south-eastern towns, wants a fundamental reassessment. His company came to AIM in April 1997, when its turnover was half the present pounds 7m, and he regards the listing as valuable in helping raise the finance for an expansion programme.

He sees little trading in his shares, except from market makers marking the price up or down, depending on company developments. "It's a perfectly respectable way of raising money, but there are no buyers and sellers," he says. "It's another form of venture capital."

News
peopleFrankie Boyle responds to referendum result in characteristically offensive style
News
news
Life and Style
Couples have been having sex less in 2014, according to a new survey
life
New Articles
i100... with this review
PROMOTED VIDEO
Voices
Holly's review of Peterborough's Pizza Express quickly went viral on social media
Sport
footballTim Sherwood: This might be th match to wake up Manchester City
Arts and Entertainment
musicHow female vocalists are now writing their own hits
New Articles
i100
News
ebooksAn unforgettable anthology of contemporary reportage
News
news
Arts and Entertainment
musicBiographer Hunter Davies has collected nearly a hundred original manuscripts
News
Blahnik says: 'I think I understand the English more than they do themselves'
people
Arts and Entertainment
Michelle Dockery as Lady Mary Crawley in Downton Abbey
TVInside Downton Abbey series 5
Life and Style
The term 'normcore' was given the oxygen of publicity by New York magazine during the autumn/winter shows in Paris in February
fashionWhen is a trend a non-trend? When it's Normcore, since you ask
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam