No Pain, No Gain: To buy or not to buy on the fringe share market?

With Myhome International switching from the Plus share market to the Alternative Investment Market (AIM), the No Pain, No Gain portfolio is without any representation on the fringe share-dealing facility formerly called Ofex.

I am keen to remedy such a sad state of affairs. After all, my three Plus excursions have been profitable. Montana, a restaurant chain, was taken over and Printing.com, as well as Myhome, graduated to AIM. There was, I must confess, an element of luck with the Montana success. It fell to a takeover bid from what is now the Food & Drink Group. The portfolio enjoyed a cash exit, but if it had elected to take the bidder's shares it would have been grievously out of pocket.

There are a number of fascinating companies traded on Plus. Among old established constituents is family-controlled Shepherd Neame, the nation's oldest brewer. And promising fledglings include FeONIC, with its "whispering windows" advertising gimmick for retailers.

But I am wondering whether my craving for another slice of Plus could, to some extent, be satisfied by actually venturing on AIM again - and bagging shares in the market's parent company, Plus Markets Group. It is quite ironic that at a time the London Stock Exchange is under threat, the upstart PMG is expanding rapidly. It has just raised £25m, placing shares at 14p against the 19p price ruling on AIM. It is by far its largest money-gathering exercise since the group, in effect, went under new management following the emergence of former AIM chief Simon Brickles as chief executive.

I have followed the fringe share market since it was born in 1995. Stockjobber John Jenkins thought the Exchange was ill advised to abandon the old matched bargains facility and set up Ofex (Off Exchange) for the many matched bargain companies - such as Shepherd Neame - and small ambitious enterprises not suitable for AIM. Although it suffered some setbacks the Jenkins-led venture did well for seven or eight years. It even floated its own shares on AIM. But it encountered problems. Jenkins departed - he now runs JPJL, an even more tertiary market catering for unlisted shares - and his son Jonathan, who was managing director, has joined the board of Myhome.

There is no doubt that Brickles sees PMG evolving from fringe market status. And he is attacking the Exchange's dominance by introducing a quote-driven platform for AIM and some fully listed shares. About 850 Exchange-traded companies, worth £150bn, are on the PMG alternative market. In addition, the original Plus market is growing again and accommodates 180 constituents with a £2.4bn capitalisation. Overseas ambitions also lurk.

The Exchange dwarfs PMG - an ant-and-elephant confrontation. And it is difficult to decide whether Plus, which intends to seek a full listing, will become a serious rival to the long-established and highly successful Exchange, currently defending itself from the unwanted takeover attentions of Nasdaq. There are signs the Exchange, which is enjoying record trading, is a little disconcerted by the Plus adventure. It could, after all, hardly welcome such a cheeky intrusion into its territory.

I hope the Exchange retains its independence. It is right that its dominance should be challenged but it is a well-run business and it would be a tragedy - and a severe blow to British pride - if such a vital element of the nation's investment industry fell into overseas hands. Still, in this sacrificial age domestic icons have their price. Although Nasdaq's offer is too low, I wonder about the resilience of the Exchange's fly-by-night hedge fund shareholders. There is a strong case for the Government blocking the US assault.

If the Exchange should go under foreign ownership, it could benefit the upstart market's ambitions to emerge as a powerful force in the investment world. Some City firms are already substantial shareholders and there must be a strong possibility that its appeal will increase should the Exchange fall under US control. Another possibility is that a thwarted Nasdaq will descend on Plus, using it as a vehicle for its European ambitions.

I am looking around for new portfolio constituents. PMG, still loss-making, is one candidate I am considering. Another is Private & Commercial, the recovering hire purchase group.

cash@independent.co.uk