New Issues Examined by Oliver Haill

In March last year, £1.6 billion was raised on AIM. This year’s £362 million was not even in the same league and nor was the £333 million bequeathed in the first three weeks of April. The torrential flow of property funds that powered the new issues market 12 months ago has slowed. However, some hefty IPOs are visible on the horizon and a trio of £75 million-plus fundraisings in the second half of March indicate that there’s still hunger for AIM paper.

Indeed, the thirst for new blood continues, pre-and post-float. A prime example is eXpansys, an online retailer of smartphones and other wireless devices, which enjoyed an excellent reception in its early dealings, dialling up gains of 28 per cent at 74.5p so far. The Manchester-based group floated with a £10 million placing at 58p arranged by broker Cenkos.

Growing fast both organically and by acquisition, its revenues from the 50 websites it operates around the globe have soared 138 per cent over the last two years. The group sold over 1.5 million products to 250,000 retail and business customers last year with its reputation and strong brand awareness winning it impressive levels of repeat business. CEO Roger Butterworth is going to use the new cash to firm up the balance sheet so it can deal directly with handset manufacturers, enabling the group to improve its margins.

New issues, old hands

A number of new financial services firms are setting up shop on AIM, although not all the faces are new. They include the latest vehicle of former Brecon sheep farmer Richard Griffiths, the man who founded broker Evolution and grew it to a FTSE 250 company before leaving in not altogether glorious circumstances in 2005. He has now steered his new investment boutique, ORA Capital Partners, to market with a £35.2 million funding at 120p. With the price up to 130.5p in a week, the 18 month old company is valued at an impressive £130 million.

ORA, with IP Group’s chairman David Norwood adorning the board, holds stakes and has board representation in two AIM-listed ventures, Kanyon and Oxeco, and is armed with cash resources of around £60.5 million. One of its largest investments is a 64 per cent stake in growth company-focused corporate financier BankORA, whose broking clients include AIM-listed Avacta.

Elsewhere, legendary serial investor Bob Morton chaperoned another new investment vehicle onto the market in the form of Guernsey-registered, closed-ended investment venture St Peter Port Capital (SPPC), of which he is chairman. It managed to raise £75 million for its new fund in a float that attracted strong institutional investor appetite although the company was hoping for double that amount.

This fund will be very active in the pre-IPO market, an area in which private investors usually do not have much exposure. The board includes the experienced Tim Childs as well as Graham Shore from investment bank Shore Capital. They will have more investing freedom than most of their rivals in the pre-IPO market (principally VCTs) and should be able to snap up some bargains. One to watch.

Buying from the boss

Finally, as foreshadowed in Growth Company Investor two months ago, STM, the Gibraltar-based corporate and trustee service outfit that hopes to consolidate its fragmented market, turned up on AIM in late March. Its first investment was to buy the business of its chief executive, Tim Revill, for £13.6 million in cash, shares and debt.
Having enticed £7.5 million from institutional investors at 50p, the company promptly advanced 16 per cent following its arrival.