New Issues Examined by Oliver Haill

The slight resurgence in the IPO pipeline in September and October – after just three IPOs in the first half of the year – saw almost £230 million raised for seven newcomers. In November, a further four companies came to market, but only two raised funds, and the total was less than £2.5 million between them.

One of these was estate agency Winkworth, which raked in £1.1 million with the help of broker FinnCap as it floated a 20 per cent stake at 80p. From its origins in London’s upmarket Mayfair, the group has expanded through a franchising model to 86 offices, most in London but with overseas exposure through six offices in Portugal and France.

Despite market watchers noting that the housing market has recently begun to slow again, Winkworth’s management – including chief executive Dominic Agace and his father, chairman Simon Agace, who established the business in the 1970s – insist that the group’s low-cost franchising model helps it ride out tougher times and that when the market improves it ‘should be well positioned to benefit from an upturn’.

Agace plans to organically expand the business at a rate of eight franchises a year, the same rate that has been achieved in 2009. With the geographical core of the group being its 56-office London network, the plan is to repeat the success of the London franchise model elsewhere in the UK by establishing networks of franchises in major urban conurbations, either via acquisition or by supporting new franchisees. Further overseas moves are also mooted, including a franchise network in India.

Capitalised at just over £9 million, profitable and dividend-paying in its last three years, despite its subsiding sales, Winkworth’s tightly held shares have gathered up 2p since listing, although they could prove volatile given wider sector uncertainties.

Plain sailing for Avia?
Attracting a very similar amount of institutional cash (£1.19 million) is Avia Health Informatics, which is acquiring healthcare-focused Plain Software as it ascends to AIM from PLUS Markets.

Plain, which has been going for almost 15 years, has developed ‘decision-support’ software to allow hospitals and clinics to prioritise patient care and to provide out-of-hours services. The lead product conducts a triage process by running through a sequence of questions to allow non-clinically trained staff and clinicians to assess and process patients efficiently and safely.

Profitable in the year to February 2008, but loss-making in the 13 months to March 2009 due to a recruitment drive, Avia is well positioned to take advantage of changing primary healthcare markets, argues the management team,  led by executive chairman Barry Giddens.

With 62, mainly long-term, customers in place and many more opportunities in GP surgeries, care homes, ambulance services and prisons, the development of an updated version of the software, which can be sold via online software-as-a-service (SaaS), excites the management greatly.

The intention is to develop and grow the group both organically and through a ‘buy and build’ strategy. Avia’s shares were placed by broker Merchant John East at 60p and are now trading at a 23 per cent premium at 73.5p. Tight budgets at the NHS could work in the company’s favour in time, but winning new business in the UK could prove hard work and the shares are not for the risk averse.

Fundraisings eschewed
The first of November’s two other floats was a Full List émigré, Eclectic Investment Company, which is managed by Australians and, as its name implies, is focused on ‘any country, sector or industry’, It has experienced a 16 per cent gain in its NAV over the last 12 months but a 19.9 per cent fall over five years.

The second is ambitious and cash-rich London Mining, also listed on Oslo’s junior Axess market, which was a Company Watch pick in last month’s issue of Growth Company Investor.