Marriott Harrison’s Jonathan Pearce tells Chris McIntyre that PLUS-quoted remains an accessible and visible market for smaller companies.
‘Although the market for IPOs remains generally very quiet, PLUS has continued to attract new participants,’ comments Jonathan Pearce, a partner at law firm Marriott Harrison. He adds that it’s also ease of access that attracts many companies to the market: ‘In terms of process and cost, it’s still a straightforward procedure to get onto PLUS.’
Pearce comments that the gap between the two markets has widened when it comes to typical market capitalisation. He adds, ‘AIM has lost the bottom third of its companies, and most of those were the ones with the lowest market cap, which has increased the market differentiation.’
Still on course
While it has been difficult to attract investors, Pearce says the number of IPOs has remained similar to the past couple of years. ‘I think PLUS is maintaining its position,’ he says. ‘It is still seeing some aftershocks of the recession, in the same way that AIM is, but I think the gains and losses have just about balanced each other out.
The main trend that we’ve really noticed this year is a continuing appetite for resources companies on this market.’ He cites the IPOs of Central Asian Minerals and Resources in March, Sovereign Mines in June and Imperial Minerals in November.
A recent sign of improved confidence in the market that Pearce notes was the acquisition of a 4.25 per cent share in the AIM-listed PLUS Markets Group by the well-known investor Bruce Rowan in November. ‘It’s an interesting indicator of what may lie ahead because he’s a big investor in resources companies,’ says Pearce. ‘He’s a shrewd guy who’s done very well, so he presumably thinks there’s a good future for the market.’
Despite the well-known difficulties in raising finance on the market, PLUS- quoted companies have still been able to raise funds this year in addition to using company shares in M&A transactions. ‘One Media Publishing, which we represent, has continued to buy up music catalogues this year,’ comments Pearce, ‘which they’ve been doing through a mixture of shares and cash.’
Another example Pearce highlights is the mining company Ascot, which in November raised £3.7 million through the issue of convertible loan notes and exercise of warrants. The company raised the finance to fund the acquisition of the Chassoul Gold Mine in Costa Rica. At the same time, Ascot also announced its intention to move from PLUS to AIM.
Similarly, in November Marriott Harrison worked with the medical technology company 3D Diagnostic Imaging as the company moved from PLUS to AIM.
In a transaction that Pearce describes as reasonably straightforward, the Isle of Man-based company also raised £2.71 million to finance the launch of its first commercial product, CarieScan, which is used to detect early stages of tooth decay.
‘I’d imagine that the key issues for the move were fundraising and liquidity,’ comments Pearce. ‘Quite whether they’ll achieve greater things from AIM than they did from PLUS remains to be seen.’
Looking ahead, Pearce expects to see an increase in IPOs on PLUS now that the economy has begun to show signs of moving forward. He adds, ‘There may be a little backlog of companies that have been thinking about the timing of their move onto the PLUS-quoted market over the harder years which could now take that step.
‘What will be interesting to see is if PLUS can start to attract small cleantech companies,’ comments Pearce. ‘I think the market could be an ideal route for some of these businesses.’