PLUS goes for minus

Over the last two years I have frequently written about PLUS or mentioned its potential for smaller companies. Last week the respected small-cap journalist David Blackwell wrote an interesting article in the Financial Times (6 October 2011) about its failings.

For companies of any size to grow they need funding and to get funding they need markets. There are lots of markets each with their own particular niche. At the top end where the London Stock Exchange operates, the competition is wide, with markets competing against each other on a global basis.

At the lower end the competition is very different. Smaller companies do not have the flexibility to move to other countries and this is the market PLUS operates in. Smaller companies do have a choice though. They can seek a public listing or they can seek venture capital funding or business angels or increasingly Crowd Funding. So PLUS needs to be skilful in building its customer base, but PLUS has two problems.

The first problem is that PLUS sees itself as a regulator. David’s article started with the experience of Parry People Movers (PPM). PPM had failed to file its interim results on time, so PLUS, in its infinite wisdom, decided to suspend the shares. According to the article PLUS had not even bothered to contact PPM first to warn them that they were falling behind – the shares were simply suspended.

Of course there are rules and the rules say you have to file your results within a specified period of time. But there are ways to deal with customers, and PPM is a customer of PLUS, one of an ever declining number and this is not the way to do it. We are all responsible for health and safety in the workplace – this does not mean we are all health and safety regulators.

My experience with PLUS when I tried to list on it was similar – complete lack of support and ‘you should feel honoured we would even consider your company’. I was approved by PLUS but pulled the listing as my company was not going to benefit from the listing.

The second problem David reports on is revealed by a company which decided that as there was no reason to stay on PLUS. There is no trading and the chances of raising capital are limited. There are lots of reasons for this, not the least of which is the FSA’s continuing desire to make life difficult for the smaller brokers – FSA likes to ignore or bail out big gamblers who destroy world economies and to focus on small brokers and kill as many as you can. Lower legal costs for the FSA and more headlines, however meaningless.

What David does not mention (in addition to not mentioning the role of the FSA I hasten to add) is that PLUS is virtually unknown. So promoting PLUS shares or putting their company on this market are challenging. Everyone has heard of AIM and the London Stock Exchange, but PLUS? I ask people about it regularly and it is astonishing how few people know about it.

We are all aware that to get known you have to market yourself. But to market yourself you have to see yourself as a commercial enterprise and not as a regulator, and PLUS has so far not been inclined to do this. I developed a PLUS Index (a little like the FTSE without the sophistication) and went to talk with PLUS several times. The message was always the same – we want to tell you what you can and cannot do, but we do not want to support an Index in any way. We want to focus on other things like our fantastic AIM share trading platform.

PLUS invested millions in this platform to trade in AIM shares and then as much again in legal costs when they were sued over it by the owners of AIM, the London Stock Exchange. David reports they are closing down this misguided platform, but in the meantime their core market has shrunk to almost un-maintainable levels. This is very sad for the future of small businesses in the UK.

But PLUS has an opportunity and a challenge. The opportunity is that they no longer have to worry about the trading platform and they can focus on their core market. The opportunity to change themselves from playing regulator to developing themselves into the market they should be. The challenge is getting there now they have once again insulted the intelligence of their shareholders, the investors, and their customers possibly to a breaking point.

Losing PLUS would be a big loss to the small company market in the UK. I am just hoping someone will see the light and seize the opportunity. Personally I think they could link up with Crowd Funding in some way and the possibilities would be endless.

Give me a call any time Cyril (Cyril is the current boss of PLUS). You know where to find me.

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