New Issues Examined by Ben Jaglom

For the past few months the City has been engrossed in the well-publicised spat running between bankers, investors and advisers over the causes of a slowdown in IPO activity on the Full List, with factors ranging from banker greed to accusations of over-optimistic share valuations as possible causes for the seizure on the main market.

Meanwhile AIM has powered ahead, with June seeing £169.5 million raised, dwarfing the paltry amounts raised earlier this year and nearly triple the £59 million raised in the same month last year. This figure included the £62.5 million raised for oil and gas play 3Legs Resources and the £25.3 million raised for private hospitals play Circle Holdings.

Forging ahead
This month I spoke to Nabil Lawandy, the CEO and founder of Spectra Systems, a company that specialises in security technology for banknotes, both by detecting fraudulent notes and by providing coatings and inks for notes that makes them difficult to forge. The company joined AIM at 75.3p a share, giving it a value of £34 million at the time of admission.

An ex-professor of physics and engineering at Brown University in the US, Lawandy founded the company in 1996.

Having raised £14 million through broker WH Ireland, it is hoping to use the proceeds to increase its roster of central banks and develop its technology.

As Lawandy remarks, ‘When you work with the world’s central banks, you have to build the right relationships. It takes a while to build a reputation in an industry that is so cautious.’

Regarding the reason why Spectra is joining AIM in particular, he describes it as the ‘perfect place’ for the company as it has a number of customers across Europe including those based in London.

Lawandy is keen to emphasise the growing threat posed by money laundering, providing some examples in the process: ‘We know that there is a Middle Eastern government that had produced very high-quality counterfeit notes in the 1990s.’ He adds that at the present time there is ‘an Asian country’ that is suspected of producing high-level counterfeit notes.  

Furthermore, he remarks that there are also ‘numerous drug cartels involved in counterfeiting’. In particular, Lawandy notes that e500 notes are of particular interest to counterfeiters.

Regarding other uses of the technology, Lawandy is keen to mention that it can be used in industries including pharmaceuticals, so that consumers and businesses can confirm that a drug is authentic.

Smart ideas
Another interesting concern that has recently joined AIM is the Scottish group Smart Metering Systems, which raised £10 million at 60p a share through Cenkos.

The company develops a range of technology for electricity and gas suppliers and is keen to profit from government plans to make all electricity and gas meters in the UK ‘smart’ by 2019. Unlike usual meters, smart meters send readings directly to your gas or electricity supplier and eliminate the need for meter readers to visit your house or the possibility of being under- or over-charged.

Other companies defying the gloom include Enteq Upstream, an investment vehicle looking to acquire companies providing technology to the upstream oil and gas market, which raised £15 million, and drink dispenser and manufacturer Waterlogic, which raised £41 million to fund acquisitions. With the Trinidad-focused Bayfield Energy having raised £54.4 million, July looks to have been an excellent month for those that have faith in the potential of the junior market.