For those dedicated followers of green shoots – or green seedlings if you are the Secretary of State for Business – this month perhaps marks the moment when things changed for the better on the Alternative Investment Market (AIM).
For several months now, some of the market's key players, including brokers, investors and analysts, have said it would take a successful IPO to kick-start liquidity in the market and help get cash to some seriously under-funded companies.
And here it is. Possibly. In a couple of weeks, Max Property, a Channel Islands-based property investment company, will ask for as much as £200m (yes, you read that right) from investors in what will be the first cash-raising IPO on AIM for many months. It is also the first in Europe this year.
Nick Leslau, who will lead the group, said that last week's IPO roadshow was terminated early and he is delighted with the results. In its "intention to float" document last week, Max Property said it intends "to exploit current weakness of the UK real-estate market". The company will invest in property over five years, and already has £25m in committed funds from management, and another £35m from the private equity group Och-Ziff. The company's proposed chairman is Aubrey Adams, who said: "Difficult conditions in the UK property market present a compelling investment opportunity for those with sector experience and an in-depth understanding of long-term supply and demand issues." Participants on the AIM market, quite apart from seeing another competitor for scarce funding, will no doubt be holding their collective breath in hope that Max Property lists successfully and the deal sparks interest in the wider small-cap sector.
M&A on the rise, says Daniel Stewart
And the good news does not stop there. According to Daniel Stewart, a corporate adviser and brokerage firm that works closely with several AIM-listed firms, a majority of management teams at companies on the growth market reckon the next year will be ripe for mergers and acquisitions.
Of the 98 board-level respondents to the survey, nearly 62 per cent said they "anticipate conducting M&A in the next 12 months".
Stewart Dick, right, an associate at the group, concedes that the 98 is hardly a big sample, given that some 1,400 companies list on AIM, but says the findings are in line with other surveys. The mood in most boardrooms is clearly not as gloomy as some might think. The only major stumbling block to transactions, says Mr Dick, is financing, with a majority of groups still finding it difficult to raise either equity or debt funding.
The survey is encouraging, and suggests that confidence in the market is growing. However, companies should not rush headlong into new acquisition deals, warns Mr Dick, who argues that bad mergers are not "quick-fix" solutions for chief executives under pressure to deliver growth.
African Eagle soars on gold find
AS gold prices go through the stratosphere, African Eagle Resources last week announced it has found 700,000 ounces at its Igurubi project in Tanzania.
The news sent the AIM-listed stock soaring more than 20 per cent. The find has yet to be signed off by anyone other than the group's own geologists, but the company said it is now looking for a partner to get the project off the ground. One of the problems facing a host of AIM mining groups is that funding is rarely available to develop projects alone, and as African Eagle focuses on its nickel project in Dutwa in Tanzania, it will need to find that partner to extract the gold in Igurubi. The share price has bucked the trend by surging more than 40 per cent in the last quarter, a rise that was largely driven by its nickel operation.Reuse content