Progressive Asset Management will next month list the biggest fund to date to be targeted specifically at cleaning up underperforming companies listed on the Alternative Investment Market, the London Stock Exchange's market for smaller companies.
The London fund manager began pitching the £50m fund in the City last week. Led by managing director Robert Legget, it will take holdings in 50 to 60 companies that fund managers don't want, in exchange for shares in the new vehicle.
The fund, called Advance AIM Value Realisation, will have a life of three years.
To extract value from the companies, Mr Legget will agitate for change. "Clearly we'll encourage them to engage with mergers and acquisitions teams and private equity groups," he said. "In a rare case, we'll introduce new management."
Progressive will accept only stakes of sufficient size to give it influence with management teams. This will be the fourth such workout fund the company has raised since 2000, but the first that is focused solely on AIM stocks.
The roster of companies listed on AIM has doubled to nearly 1,600 in the past three years. Yet since May, the junior market has lost a fifth of its value, leading some institutions to shun investing in the exchange.
"Where we are right now, institutions should be keen to see [the new fund]," said Tim Stocks, head of the securities practice at law firm Taylor Wessing. "They have been subscribing to a lot of new issues in the last few years, and they are overweight in terms of AIM stocks. They are dragging down the net asset values of their funds. I should imagine [Progressive] have got their timing quite right."
Stockbroker Collins Stewart launched a similar £30m AIM Realisation fund in the summer.Reuse content