Small Talk: Aim's new chief insists the market is fit for purpose

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The Independent Online

Marcus Stuttard, who started last week as the head of the Alternative Investment Market (Aim), shares one thing in common with the Prime Minister. Both blame their immediate problems on the global financial crisis. In Mr Stuttard's case it is that the market he runs, which is designed to provide small-cap growth companies with the funds needed to achieve ambitious targets, has seized up as investors have moved their money into safer stocks.

Getting liquidity back into the system is vital, says Mr Stuttard. "The small-cap sector across the world has been hit hard by the financial crisis, but Aim, largely because of one of its major strengths – attracting institutional accounts – may have been hit disproportionately hard," he said. "There is no magic answer, but the market is fundamentally strong and the concept has been copied elsewhere."

As the number of IPOs and secondary fundraisings has dried up, many of those connected with Aim – from brokers to management teams to investors – have questioned whether Aim is fit for purpose in recent weeks. There are a lot of companies that should not be on the market, critics say, adding that some are too small, or that some management teams do not understand the requirements associated with being a listed company. Mr Stuttard rejects the idea that Aim has failed, adding that the spotlight is now on the small-cap sector to help to get economy on its feet.

'Still deals to be done'

It is hard to deny that Aim has been looking a bit under the weather. Recently the accountancy firm Deloitte, for example, said that just £3m was raised in new listings in the first quarter of the year. But despite the grim news, there are those that think reports of Aim's death are a little premature.

Jerry Keen, at the stockbroker Blue Oar Securities, says there were plenty of people saying that the market was a goner at the end of last year, but he argues that there are still deals to be done.

True, but the transactions are modest. Mr Keen himself helped to raise £1.2m through a placing for Tower Resources, an oil and gas exploration company, late last month, adding that this is the sixth deal he has done this year. "It has to be compelling," he says. "The mundane will not attract anyone and there has to be plenty of upside. We are only talking about transactions of up to about £3m, but the market is getting more receptive to deals."

Sadly, the IPO market is still closed, he says, adding it will take one new entrant to Aim to have a successful IPO, and for the shares to do well in the aftermarket, before brokers can declare the IPO market open again.

Don't panic, yet

There is nothing quite like a crisis for a publicity campaign. With the number of people diagnosed with swine flu in the UK barely into double figures, Aim-listed Red24's "pandemic expert" Ian Pidgen was being offered for comment by the overseas security group's spin doctors last week. No doubt Mr Pidgen is spot on advising clients to "closely monitor government updates," on the spread of the disease, although perhaps it is a tad too early to confidently predict "high levels of absenteeism".

Among Mr Pidgen's sage offerings is advice to "avoid panic," which can hardly have been helped by the press release.

Green shoots from an unexpected quarter

Those looking for more green shoots, at least metaphorically, should perhaps head for the Algerian desert. Petroceltic International, the Aim-listed oil and gas exploration company, last week became only one of a handful of companies in the sector to raise fresh funds from new and existing investors – the exploration industry has been one of the hardest hit in recent months. And Petroceltic managed to raise the £27.5m on the same day that it posted wider full-year losses. It helps on the credibility front, of course, to have a weight of the Spanish power giant Iberdrola – which owns 22.3 per cent – behind you are asking investors for more cash, especially if you want the new funding at a premium. The money will be used to shore up the funding needed for the group's seven-well drilling programme in Algeria this year, as well as for development of the group's sites in the Adriatic Sea. Above: The firm's vibro-seismic trucks in action.