PLUS: The New AIM?

Last month Foot Anstey advised Taunton-based Bright Futures Group plc on its acquisition of contract and workplace catering firm Restaurants at Work Limited.

The deal comprised a reverse takeover, admission to the fast growing PLUS exchange in London and associated £500,000 fundraising.

So what is PLUS and is it a viable alternative to AIM?

The Alternative Investment Market (AIM) launched in 1995 with the promise of being a public market designed to meet the needs of smaller growth companies. With a simpler admission process and a more flexible and comprehensible regulatory environment than the Official List, it has been a great success, becoming arguably the world’s leading growth market, with over 2,900 companies choosing to join AIM to date.

But is it becoming a victim of its own success? As the names of new entrants and sums raised became ever more impressive, so too did AIM’s attraction to both companies and investors. The result? An increasing trend towards bigger, international companies coming to AIM, and for large fundraising, often shifting investor focus away from smaller growth businesses.

These, and other factors, including the costs of flotation, have prompted some commentators to question whether AIM still serves the small and entrepreneurial businesses it was originally set up to help.

Looking to capitalise on this situation is PLUS, the UK’s new, independent stock exchange for small and mid-cap companies. Offering a more flexible, straightforward admissions process, the cost of a PLUS float can be half that of an AIM float.

PLUS was previously Ofex, also founded in 1995, as a facility for trading shares in unlisted companies and a platform for young growth companies to raise relatively modest sums. PLUS is fully authorised and regulated by the UK Financial Services Authority. It holds Recognised Investment Exchange (RIE) status giving it the same rights and privileges as the London Stock Exchange, and therefore also opening up the potential for European investment.

Recently, PLUS has worked with stock exchanges internationally in an effort to create a pan-European equity marketplace for small and mid-cap companies. This year it allied itself with the Munich Stock Exchange in Germany, the second largest equity marketplace in Europe. PLUS is also encouraging existing Official List and AIM companies to join its secondary market trading system, with the promise of increased liquidity and quicker and cheaper execution of share trades.

So, could PLUS be a viable option for smaller, entrepreneurial business looking to grow in an economic climate where debt finance is tougher to secure, subject to tighter covenants, with tougher margins and venture capital funding increasingly selective and hands-on?

The current economic environment means attracting potential investors and accessing new sources of capital is going to be tough. The same holds true for PLUS, but anything actively seeking to support the country’s smaller, entrepreneurial businesses and increasing their choice can only be a good thing. PLUS or indeed ‘going public’ is not right for every company, so getting the right advice from the region’s able corporate finance advisers is crucial.

Smaller entrepreneurial companies are often quicker to adapt to changing times. When they do, and new capital is needed, PLUS now provides another serious option.

Contact Chris Worrell for further information or advice.

Published 03/12/2008. The author of this article is Chris Worrell