Small Talk: Aim marks many happy returns as worst may be over
Monday 21 June 2010
The typical 15-year-old can be irrational, behave unexpectedly badly, and disappoint those who have invested huge amounts of capital in it. Over the last two or three years, the Alternative Investment Market (Aim), which last Thursday celebrated its 15th anniversary at the London Stock Exchange Group's headquarters in the City, has treated investors, companies and commentators with all the contempt of a surly teenager.
But much like the average human, there is still much hope that the exchange, which has also provided lots of joy for most of its years, has experienced only a temporary adolescence.
In truth, it is becoming clear that the worst is over for Aim, after the credit crisis led to a record number of delistings and severe difficulties for companies looking to raise money. The market's head, Marcus Stuttard, said he is confident about the exchange's future. "We have an incredibly strong foundation linked to the success of the last 15 years," he said.
"It is the breadth of the Aim community; the companies, the investors, the brokers and everyone else that makes up the community that indicates a strong future. And the wider economic climate is also positive. Debt and bank finance has become much more difficult to come by for small companies; and even when it is available, it is now much more expensive."
Of course, you might say, Mr Stuttard would say that, wouldn't he? Well maybe he would, but those of a more independent bent agree with him. David Snell, the Aim leader at the accountancy and business advisory group Price-waterhouseCoopers, argues that on the whole, Aim has done extremely well over the last 15 years. "We should be very proud of the achievements of Aim. Overall it has been an incredible success," he said. "Possibly we will see fewer overseas companies coming to the market in the next few years as other countries adopt similar exchanges. This has already happened in China, for example. But it won't necessarily be a bad thing, and should help to improve the quality of the exchange."
The maxim that you can have too much of a good thing was plainly in evidence last week, when Aim-listed accountancy and business advisory group Vantis had its shares suspended by the exchange after conceding it may not have enough money to stay in business.
The company has been busy working away on the car crash that is the multitude of insolvencies caused by the recession over the last couple of years – the most high-profile mess it has been tasked with sorting out was two businesses at the heart of the debacle caused by Sir Allen Stanford, the Texan billionaire who is awaiting trial for fraud over the dealings of his Stanford Financial group of companies.
But it now appears Vantis is need of a bit of help itself. A recent audit by the accountants Ernst & Young warned that there was potentially insufficient money to maintain the firm as a going concern. Sources close to the company say the issue is a cashflow problem, and that the group is working to resolve the problems. However, it would appear that Vantis looked at the fallout from the recession as a dog may look at a juicy bone, and got a little greedy.
Chief executive Paul Jackson, who founded the company, and Nigel Hamilton-Smith, who ran its business recovery unit, have resigned as directors but are continuing to work with clients. Steve Smith, formerly the finance director, has moved into the chief executive's office and is charged with not only trying to rescue the group, but also trying to stop the group's banks from pulling away the rug from underneath the company over its £50m of borrowings.
The problems at Vantis have also caused clients to get a little jittery. Two weeks ago the High Court of Antigua, which is where Sir Allen Stanford held his business empire, removed Mr Hamilton-Smith and another Vantis employee, Peter Wastell, as joint liquidators of Stanford International Bank.
Metric Property Investments
While Vantis was coming to the end of its life on Aim last week, albeit maybe temporarily, one of the market's newer groups, Metric, was making a first foray into the property sector. The newly incorporated Reit, which has been established to invest in retail real estate, last week made its first acquisition following its £190m flotation in March. The group splashed out £28.4m on the Damolly Retail Park in Newry, Northern Ireland, using cash reserves to fund the deal.
The 150,000 sq ft park is currently 93 per cent let by income with an average unexpired lease term of 14.3 years. Metric has also acquired an adjoining development site with outline planning consent for a 14,000 sq ft supermarket.
"We have been rigorous in our investment strategy for Metric and are very excited to be announcing this as our first transaction," said the group's chief executive, Andrew Jones. "This acquisition satisfies the key investment criteria we set out at the time of the IPO – of acquiring well let retail investments off low rents and where our retail customers trade successfully. High occupier contentment is the key to growing rents and exploiting the arbitrage between current income and sustainable rents."
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