Winterflood takes 17% stake in Ofex deal

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The Independent Online

Ofex, London's fringe market that is home to the football clubs Arsenal and Glasgow Rangers, has raised £3.15m through a rescue share placing and appointed Simon Brickles, a former head of the Alternative Investment Market, as its chief executive.

The placing, at 5p a share, will dilute the stake of the Jenkins family, which created and ran Ofex, from 55 per cent to about 15 per cent. Winterflood, the market maker, will inject £700,000, giving it a 16.6 per cent stake in the company. Christopher Morgan, an adviser to the Ofex board, said: "It's the largest fund-raising we've ever done and gives us ammunition to go forward." Without the share placing underwritten by Numis, its broker, Ofex would have run out of money in November - its cash resources had shrunk to £182,000.

John Jenkins, the Ofex chairman who founded the market in 1995, will retire as soon as a new chairman is found. His children Jonathan and Emma, who jointly ran the company until now, will step down from the board and leave the company to make way for Mr Brickles and Darren Francis, who was named chief financial officer yesterday.

Tony Drury, the chairman of St Helen's Capital, the corporate finance boutique and one of the main sponsors of Ofex, said: "It was time for a change, but we acknowledge the efforts and vision of the Jenkins family to build the market in the first place."

Ofex, which has 137 listed clients, has been losing out to its bigger rival AIM, which was founded at about the same time. They came into being in 1995 when the London Stock Exchange abandoned the old matched-bargains facility to cater for companies that cannot, or will not, join the main market. Ironically, Ofex is listed on AIM, which attracted 42 companies in July, while only eight entered Ofex in the first half of the year. Ofex plans to create a two-tiered market to attract more businesses, with a premier and a regular section. Its losses widened to £533,000 in the first half, from £273,000 in the same period last year.

Simon Kiero-Watson, the managing director of 535x, a trading system that approached Ofex last week about a possible tie-up, said: "You can't keep running a business if you have losses of £500,000 and £1m worth of costs - they've got to turn the business around. They said they want to take the fight to AIM - if they receive the funding, they will be able to do that."

It seems unlikely that a bid by Zyzygy, a technology investment company which has said it may make an offer for Ofex, would succeed as it is thought to be lacking sufficient funds. It is understood that there are no other bidders.

Ofex will change its name to PLUS Markets Group, effective on the date of an extraordinary general meeting on 1 November.