Companies: ALLG    CVSG   

Scanning the statistics, one could form the opinion that AIM is losing its appeal among newcomers, given the dearth of new issues and the fact that 169 companies have left the market this year, compared with 167 joining it.

However, the picture is not that gloomy. Enthusiasm remains robust for companies already quoted on AIM: £2.6 billion more money was raised in secondary fundraisings than primary ones by the end of September and seven companies have bucked the trend by listing in October - with a further 16 lined up to join them at the time of writing.

Feline-fuelled fundraising
By far the largest float since mid-August was that of CVS Group, AIM’s first-ever veterinary surgery chain, for which broker Panmure Gordon attracted a remarkable £92 million at 205p. Following the lack of recent IPO action, institutions didn’t look this gift horse in the mouth, with US hedge fund Tiger Global the most significant backer of the business in the placing, followed by Fidelity, UBS, Artemis and others.

Chief executive Simon Innes, who cut his teeth at high street optician Vision Express, is the architect of a consolidation spree that has seen CVS buy 128 surgeries in three years, extracting economies of scale by centralising administration and buying drugs and equipment in bulk. Growth drivers for CVS include the expanding cat population, as well as the rise of pet insurance, driving more vet visits and surgical procedures.

Innes says CVS has come to market to raise its corporate profile and secure its ‘continued success in both acquisitive and organic growth’. According to investors, so far it has worked, with the shares having prowled to a 14 per cent premium at 233.5p.

‘A good time to come to market’
Another to watch out for is newcomer e-Therapeutics, a Newcastle University spin-out that arrived in a £5 million IPO. The brainchild of Professor Malcolm Young, e-Therapeutics uses its patented computer technology to unearth potential blockbuster drugs. The portfolio it has produced from this process reads like a panacea for many of the world’s great ills, containing treatments for asthma, skin cancer, furring of the arteries and hospital super bugs.

In spite of wider economic concerns, Young suggests now is ‘quite a good time to come to market’ for e-Therapeutics and potential investors because, as a drug discoverer, analysts’ valuations have not yet fully taken into account possible highly lucrative ‘clinical end-points’. Founded by Young while a research fellow at Oxford, the company was steered on a more commercial path by seed capital from hedge fund manager RAB Capital.

Like other small developers, e-Therapeutics doesn’t aim to manufacture or distribute drugs itself. Rather its paydays depend on licensing out to the giant pharmaceutical companies. According to Young, it won’t be too costly for the company to get to that point either, on account of its computer-based technique. ‘Our cash burn is lower as we don’t need to employ an army of people in white coats with pipettes,’ he says. With e-Therapeutics ‘in discussion with multiple partners’ and expecting to furnish investors with news flow ‘later this year’, the shares could reward a speculation.

All Leisure sets sail
In a float evoking images of an Agatha Christie thriller, Nile cruise operator All Leisure has coasted onto AIM with a £19.7 million fundraising at 180p arranged by broker Blue Oar. Of this total, £10 million filled the company coffers with the rest going to existing shareholders.

All Leisure, which has lately expanded into European and Antarctic cruises under the Voyages of Discovery and Swan Hellenic Brands via acquisitions of two further leisure ships, is a strongly cash-generative counter operating in a buoyant and fast-growing market.

The company offers investors strong asset backing and a high degree of visibility, since each season’s cruises are typically up to 90 per cent pre-sold. Demand since the shares moored on AIM has been healthy, with the shares having drifted north to 187.5p.