New Issues Examined

Following two slow months, November saw AIM eagerly welcome 21 newcomers into the fold, representing the fourth best month for new issues this year.

A total of £680 million was raised, not too far from the combined £760 million of new money generated during the previous three months. It might have been even higher, but for Citi Group shelving plans for the £100 million float of Hambro dynasty forestry play Russian Timber.

Institutions have been throwing money at a few other prospects with what appears to be renewed abandon, although, given fears about the global financial situation and particular uncertainty regarding the real estate sector, it is surprising that two property funds have extracted the most cash.

London & Stamford Property, ushered to market by adviser and broker KBC Peel Hunt, attracted £247.5 million at 100p, impressive given market conditions. Crafty speculators Raymond Mould and Richard Vaughan, who sold their property firm Pillar to British Land for £800 million two years ago, hope to profit from an imminent ‘correction’ that they foresee in the UK property market. This has attracted the backing of General Electric’s asset management arm – which has invested 15 per cent of the funds – with Electra Partners and BlackRock joining in.

Pacific Alliance tackles China
Another property newcomer, following a $400 million (£195 million) placing arranged by adviser Grant Thornton and broker Edmond de Rothschild Securities, is Pacific Alliance China Land. This fund is the sixth brought to AIM by Hong Kong-based Pacific Alliance Group following the successful Vietnam Opportunity Fund, ARC Capital and VinaLand.

The arrival of sizeable property funds has fuelled much of the growth of AIM over the past two years, although in many cases the share price performance has lagged. However, given its Eastern focus, strong record and the fact that it is one of the few funds to offer exposure to Chinese land, Pacific Alliance Group, like London & Stamford, could repay a punt.

HipCricket bowls onto AIM
A prospect from AIM’s busiest IPO broker Collins Stewart, intriguingly christened HipCricket and attempting to bring the money-spinning powers of mobile phones to the media barons of the USA, also excites.

‘Mobile marketing is still in its infancy here,’ confirms Seattle-based co-founder and chief executive Ivan Braiker. ‘Already, HipCricket has become the go-to guys for the radio industry and soon we believe it will be the same for TV,’ he enthuses. He was encouraged to list the business on AIM by executive director and investor Willy Paterson-Brown (of Accsys Technologies), as UK investors are more familiar with the industry. Braiker explains that the company’s name was derived from a story about kids calling their mobile phones ‘hip crickets’ as they sit on their hip and chirp.

The company is expected to enjoy explosive growth in what is a nascent mobile marketing sector in the States. HipCricket has had to adjust the UK model, as it is against the law in the US to operate the sort of premium phone lines that have gotten the BBC and Ant & Dec in trouble in the UK. Instead, advertisers pay broadcasters for games and features involving listeners or viewers sending text messages to a station in response to an advert. ‘We’ll have gone from 33 radio stations to 180 by the year-end,’ declares Braiker, ‘and in the next 12 to 18 months we believe we’ll go to around 500.’

Sales are expected to leap from $2 million (£1 million) this year to $14 million and $34 million for 2008 and 2009, with the next two years churning out 3.6c and 36.6c of earnings. If just a portion of that super-fast growth can be produced, this cricket could jump.