On the PLUS side
PLUS offers Enterprise Investment Scheme tax reliefs to companies and investors. Jay suggests PLUS is an ideal market to raise between £250,000 and £1 million, and says it can suit companies to raise money privately and then move to PLUS quickly and cheaply.
PLUS is also likely to host more shell companies, providing quoted vehicles into which budding entrepreneurs can insert their businesses. AIM shells with less than £3 million raised by the start of October have now been de-listed, which could send a few over to PLUS – if the market will accept them.
If you can raise money on PLUS, one advantage is that you could avoid putting yourself in the hands of venture capitalists. Their relatively short-term exit targets, demanding investment return requirements and itch to ‘micro-manage’ can make it hard to develop your business in the optimum way. Under Brickles, PLUS has beefed up its market discipline but it still imposes a less onerous and costly regulatory framework than AIM, which is increasingly becoming more like the full Stock Exchange in regulation and expense.
Companies seeking admission to PLUS must now appoint a ‘corporate adviser’ to supervise the process, but the corporate adviser is not expected to take on the full regulatory duties of the equivalent ‘nominated adviser’ on AIM. The market itself vets – and vetoes – admissions and acts in what it describes as a ‘paternalistic’ fashion, giving guidance to corporate advisers and rapping knuckles, sometimes publicly, in what some claim is a welcome return of the ‘suasion’ of the Stock Exchange regulation of the old days.
Changing its stripes
PLUS began life 11 years ago as OFEX, founded by share dealer John Jenkins, to offer a relatively inexpensive and lightly regulated route to investment funds for young companies not ready for a full Stock Exchange listing. Initially, the market attracted two types of company: young groups wanting to fund early-stage growth before either moving onto a more senior exchange or merging with larger groups, and established groups, such as brewers or football clubs, whose owners were not interested in an active market for their shares but simply wanted a value established for tax, inheritance or other reasons.
Companies that have successfully moved from OFEX/PLUS to AIM include the online betting group Sportingbet, which reached a market value of £767 million before sector troubles took the wind out of its sails, and Chinese lottery operator Betex, another Hon company, which has a more modest £63 million price tag. Among those now pondering a move from PLUS to AIM is Italy-focused energy explorer ATI Oil, whose boss Derek Musgrove says the company originally floated with a £500,000 private funding in late 2004. That was primarily to satisfy a key Swiss investor, whose banks required him to have his investments on an ‘officially recognised’ market, a qualification that OFEX provided.
| Previous page | Next page |