Optos opts for main over AIM

Optos, a leading medical technology company, joined London's main market in February 2006 and raised £30 million in primary proceeds in the process. But why did it go main, rather than to AIM?

Founded in 1992, Optos specialises in the design, development, manufacturing and marketing of retinal imaging devices. Its platform technology enables an image of up to 82 per cent of the retina – far more than most devices allow – to be captured in one go. Headquartered in Dunfermline, the company had, until its float, been privately owned and supported by a core group of long-term, primarily Scottish-based investors. It currently has operations in the US, Canada, the UK and Germany and in 2005 it turned its previous losses into operating profits of around $2 million (£1.1 million), on revenues of $48.4 million.

Although Optos has an international reach, listing in London was the preferred choice. ‘It made perfect sense for us, being UK headquartered, to access the UK capital markets,’ explains John McNeil, director of communications at Optos. ‘The LSE is a world-class market. It provides access to a wide pool of capital, and has a very high standard of regulation.’

As McNeil notes, the value of assets under management in London far outstrips those in other leading North American and European financial centres. London and the LSE also have a strong track record of interest in and being supportive of smaller capitalised companies. ‘The European markets pay attention to smaller cap companies,’ McNeil says. ‘If you have a value less than half a billion US dollars and are headquartered outside of the US you run the risk of going off the investment radar screen if your shares trade on one of the US markets.’ At the same time the ‘US capital markets have become subject to highly prescriptive legislation, notably since the Sarbanes-Oxley Act was introduced after a number of cases of corporate malfeasance.’

London’s main market was preferred to AIM for a number of reasons. ‘We fit in very nicely on the main market,’ McNeil says. ‘We are not a start-up and easily met the three-year trading record, which is required for the main market. We are very comfortable with the UKLA (UK listing authority) and what they require of us and believe the Combined Code provides terrific guidance for UK public companies. On the main market you have to have 25 per cent of your shares in public hands, which means you get decent liquidity. There are other advantages too, in terms of gaining a higher public profile, and trading on the main market provides reassurance for suppliers and customers, as well as employees, that the company is subject to and has fully satisfied its regulatory and other due diligence requirements.

‘Meanwhile, the fact that we would have access to greater capital than we could on smaller markets was another reason for going for the main market,’ McNeil commented.

The higher regulatory demands made of companies on the main market as opposed to AIM was seen, if anything, as an advantage. ‘We work in a highly regulated medical environment so we are very used to the scrutiny of regulation,’ McNeil notes. ‘So the regulatory level appealed to us. The fact that the main market is highly regulated fits with the environment in which we operate, and in which we are expected to remain fully compliant.’

This article was originally published in Masterclass magazine.

Marc Barber

Marc Barber

Marc was editor of GrowthBusiness from 2006 to 2010. He specialised in writing about entrepreneurs, private equity and venture capital, mid-market M&A, small caps and high-growth businesses.

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