Time to tap PLUS?

The current difficulties that small to medium-sized enterprises (SMEs) face in securing financing can be frustrating, writes Clive Garston, corporate partner at law firm Halliwells.

The lack of available bank finance has led some companies to consider the PLUS quoted market, due to its relatively simple admission process and low listing costs compared to AIM, the junior market of the London Stock Exchange (LSE). Below I’ve set out the main points to consider when contemplating raising finance on the market.

Background, pros and cons

PLUS is based in London and is a well-established market for SMEs. As AIM did when it was first established in the mid-1990s, PLUS quoted offers cheaper listing fees and improving liquidity as more and more investors begin to take notice of it. Regulation is lighter than it is on AIM, and the market has fared comparatively well in the current climate, although it did lose ten companies in March.

Advantages of a listing on PLUS, apart from the lower entry fees, include the potential for a company to benefit from a better profile, enabling it to win extra business, and the ability to set up tax-effective share schemes to incentivise employees at a time when it may be difficult to offer pay increases. Employees who receive shares as part of their remuneration package will be able to chart and take pride in success of the company, as well as ultimately being able to realise the value of their shares.  

However, the decision to list on PLUS should not be taken lightly as there are potential pitfalls. The key disadvantage is of course the annual cost: it may be several times cheaper than the price of an AIM listing but it can still total up to £50,000 a year once the fees of advisers and a non-executive director’s salary are taken into account (see below for more details).

Another danger for all public companies is the temptation to make decisions to bolster their share price at the expense of the overall health of the business. Companies may feel as if they are constantly ‘on the treadmill’, worrying more about how investors will react to their next set of financial results than what is best for their organisation in the long run.

For these reasons, the decision to list should only be taken after a thorough cost-benefit analysis, ideally with professional advice.

Practicalities of getting a PLUS listing

The average market capitalisation of a PLUS quoted company at the end of 2008 was just under £9 million, significantly lower than AIM’s figure which stood at over £25 million in March. Yet for those who are considering a quotation on PLUS the process is very similar to listing on the AIM market.

The only real difference is that the admission fees are considerably less. Excluding the cost of fundraising, the cost to get on to PLUS varies but is usually between £70,000 and £100,000, while on AIM it could be three or four times that amount. All in all, annual costs on AIM work out at around £100,000 to £200,000 compared to say £50,000 on PLUS. The fees are lower simply because the professionals involved, such as accountants, lawyers and corporate advisers, charge less, and may be required to do less work. Also, for a listing on PLUS a company will only need one non-executive director compared to the minimum of two required by AIM.


Compared to other small cap exchanges PLUS has traditionally been viewed as a stepping-stone to AIM, or even the LSE’s Main Market. However, in today’s economic climate the market seems to be growing in popularity in its own right.

There are currently over 200 companies quoted on PLUS with a combined market cap of over £2.3 billion. In February the largest company ever to join PLUS, Kuwaiti property concern Rak Real Estate, entered the market with a market capitalisation of £604 million, dwarfing the next biggest company, Arsenal Holdings, which has a market cap of £470 million. This shows not only the health of the market, but also the growing status of PLUS quoted. It is enjoying a growing and increasingly sophisticated investor base, who regard it as an excellent place to find investment opportunities in young, fresh, entrepreneurial and growth-orientated businesses. SMEs looking for capital should seriously consider PLUS as an option.

The views expressed in this article are those of the writer and are not endorsed by GrowthBusiness.co.uk

Nick Britton

Nick Britton

Nick was the Managing Editor for growthbusiness.co.uk when it was owned by Vitesse Media, before moving on to become Head of Investment Group and Editor at What Investment and thence to Head of Intermediary...

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