If last year was the worst ever for London’s small cap new listings scene, it looks like 2023 could be just as bad for AIM.
However, one under-reported trend last year was that initial public offers numbers on the Aquis Stock Exchange (AQSE) put its junior market rival in the shade last year.
And, with an offer that it says is more appropriate for small companies and the entrepreneurs leading them, Aquis Exchange chief executive Alasdair Haynes this week reported ‘momentum building’ with a strong pipeline of new arrivals.
Numbers are not the be-all and end all but over the 18 months since the start of 2022, AQSE welcomed 27 new arrivals, while on the London Stock Exchange’s AIM there were 18 or 15 newcomers, depending on how you spin it.
After 22 arrivals last year, the first half of this has seen five IPOs for AQSE, though AIM has so far attracted six new listings after 12 (or nine) the year before.
Aquis Exchange chief executive Alasdair Haynes (pictured) this week reported ‘momentum building’ with a strong pipeline of new arrivals
In the Aquis half-year results in the past week, Haynes said it was reflective of the general slowdown in IPO activity across the market amid challenging economic conditions but said all were well supported by investors.
‘Let’s be honest, it’s well documented how appalling the market is at the moment – probably the worst in living memory, although I’m old enough to remember the 1970s,’ Haynes tells Proactive.
‘It’s low volume stuff, and raising capital is extremely difficult,’ he acknowledges.
However, he pointed to the continued momentum from its AIM-beating performance last year and said AQSE has a ‘very strong pipeline’, with high growth and ‘new economy’ businesses keen to join.
Aquis, the parent company of AQSE as well as the pan-European Aquis Markets exchange (seventh largest in Europe), and also a provider of stock exchanges venues and technology (of which five of its seven contracts are revenue generating so far), is itself listed on AIM.
Haynes said being listed on the junior wing of the LSE since 2018 has further opened his eyes to what smaller companies needed from a listing.
‘When we went public five years ago, I found that I had a corporate governance code the same as BP.
‘Now, we have 25 staff, they have hundreds of 1,000s of staff, is that really proportionate?
‘And we found the whole process took too long and was far too expensive.’
One of the reasons why AQSE has attracted more IPOs over the past 18 months than AIM is that, says Haynes, it provides rules and requirements for small listed companies that are ‘proportionate and appropriate’.
It is not about a difference in standards with AIM or the LSE main market, he says.
‘Our standards are not lower, but we’ve made life easier for entrepreneurs to be able to come to market.’
This includes templating admissions documents, shortening the process for the accountants, other easier documentation and not having the nominated adviser or Nomad structure.
‘So I think we found a lot of companies that might in the past have gone to our direct competitor at the LSE, surely finds that for growth businesses AQSE is an ideal market.’
For the men and women who run SMEs, he said the big difference is about how they use their time.
‘One of the main things that entrepreneurs like to have a clear vision of where they’re going and they want to spend most of their time on what they are good at, which is running their business and not spending 90% of your time looking for money.’
He says Aquis also acts more like a training ground for companies and bosses new to the public markets, akin to the education system.
Newcomers at an earlier stage in their growth can join the Access segment, which has lower disclosure requirements, and when they are more established can graduate to the Apex rules when they are ready, requiring higher governance and other requirements on market cap, free float, markets makers and trading history.
These are rules refined by the lessons learned on the LSE, he says, and that message to entrepreneurs ‘has gone down pretty well and we not only beat AIM last year but also we’ve actually increased revenues from our issuers’.
To read more small-cap news click here www.proactiveinvestors.co.uk
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