The word around the markets is that PLUS, the small- and mid-cap stock exchange, has fared better than others, and proved resilient in the recessionary storm. As a result, the market is attracting much more interest.
Companies on PLUS tend to be capitalised at less than £50 million. This is seen as a factor in the market’s growth as it means these ventures are on a market with similar sized businesses, which helps increase their profile and visibility among investors. ‘Our focus on growth companies is meeting a real need in the market,’ explains PLUS Markets’ Vivienne Cassley. ‘Companies can trade on our market knowing they won’t be competing against lots of billion-pound businesses.’
Recent successes include 3D Diagnostic Imaging, a developer of scanning technology. The company has raised more than £2 million since it was admitted to PLUS in April, while business training company Winning Pitch has seen its turnover increase by 43 per cent since its December 2007 listing.
The total market capitalisation of the companies quoted on PLUS (around 200 at the end of August) increased by 34 per cent to over £2.5 billion in the first half of 2009. While set up to attract entrepreneurial-sized companies, it’s fair to say that PLUS also has its fair share of heavy hitters, not least RAK Real Estate, which listed in February via a reverse takeover with a market cap of £600 million. The next biggest company on the market is football club Arsenal Holdings, valued at £470 million. ‘A lot of the new entrants have tended to be more established companies,’ observes Karen Gilbert, also at PLUS Markets.
Many cite a lighter touch to regulation and the lower fees as a major factor in why PLUS is managing to tempt business away from the Alternative Investment Market (AIM), the junior market of the London Stock Exchange. While AIM fees and compliance can cost up to £200,000 a year, the average annual cost of a listing on the PLUS-quoted market is a more modest £50,000.
But maintaining the quality of the companies on the market is key to PLUS’s success, says Cassley: ‘Regulation is appropriate to the size of our companies. Everything is there to protect investors but we keep it simple. The emphasis is on allowing companies to generate returns for their shareholders while not tying them up with red tape.’
The exchange is also gaining ground internationally. Around ten per cent of the market consists of non-UK organisations, and as Gilbert notes, ‘International companies on PLUS are from all over the world and from many different sectors. While our focus is very much on building the market for growth companies in the UK, international companies are also important to our business.’
One of the thriving international companies on the market is China CDM, a carbon emissions broker admitted to PLUS in December 2006. The company’s market cap has soared from £25 million to £86.3 million, and it has raised £15 million since coming to market.
The growing popularity of PLUS means it is now seen less as a gateway to AIM and more as an important market in its own right. ‘With four new advisers joining the market this year and a really strong pipeline of companies, we are really building momentum,’ says Cassley. ‘People are taking notice and advisers are adding PLUS to their toolbox.’
PLUS MARKETS AT A GLANCE
PLUS is a Recognised Investment Exchange (RIE). It operates a primary and secondary market.
Primary markets include:
• PLUS-listed – EU-regulated market
for companies admitted to the FSA’s Official List
• PLUS-quoted – Exchange-regulated market for quoted (“unlisted”) companies.
Seconday market (trading facilities) for all PLUS primary market companies on the LSE (Main Market and AIM) and other EU exchanges.