AIM – Not enough liquidity, but plenty at Grocers Hall

Off to Grocers Hall in the City for the Growth Company Awards where we sip champagne in a beautiful red velvet room adorned by paintings of well known grocers of shopping days past, including er…. Lord Carrington. I’m not sure what his connection is; perhaps like me he worked at Sainsbury’s while he was a student (though somehow I doubt it).

The Awards are sponsored by Sharemark, promoting its leading alternative share-trading platform which allows small businesses to raise liquidity (even for businesses already quoted on another exchange). These events can become a bit indistinguishable from each other especially after plenty of liquidity of the bubbly kind and so it was good to see that Gavin Oldham, the founder and CEO of Share plc, Sharemark’s parent company, was the headline speaker to kick the evening off.

Mr Oldham always has something memorable to say, based on his many years in the City and having set up not only Share plc but also Barclays Stockbrokers. He is a fierce advocate of private shareholder rights and not afraid to point his finger at the City when he feels it appropriate, and that was what he did this evening. He had taken part in a breakfast seminar with a dozen CEOs of AIM companies and all were questioning the benefit of staying on the market; not surprising when you consider that 257 companies delisted from AIM last year.

The thrust of his talk was that too often companies are taken down the IPO route onto AIM or PLUS but that thereafter they get little support from advisers in making the most of their listing, and become “stranded”. The problem is often that too few companies focus on liquidity or get support from advisers on managing liquidity. This in turn is usually due to the IPO process almost invariably being satisfied by a placing to institutional shareholders and having too few retail shareholders on board. He suggested that City brokers should get retail brokers involved so the company has more private shareholders on its share register. These are the people who provide liquidity through frequent trading whereas institutional shareholders tend to hold their shares and not trade frequently and sometimes the shares stagnate due to minimal trading.

You can’t fault Mr Oldham’s logic but equally looking at this commercially from a City brokers point of view, it’s much easier to just talk to a few institutions and get the placing done rather than deal with tens or hundreds of private shareholders. Of course, Mr Oldham would point out that Share plc can handle this nightmare for City brokers, but this is too rational an argument; the City, despite its dynamic image, is actually quite slow at changing its ways whatever those ways are. Hence, Mr Oldham’s rallying call that this area requires a change of attitude from corporate advisers.

An excellent evening overall, and a good point made by Mr Oldham, but I was left wondering why something called the Growth Company Awards only has two of its nine awards for growth companies and the remainder for City advisers. Surely shome misthtake as they say after too much fizzy liquidity.

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