Capital Raising & Flotation
 
If you are considering flotation to raise funds, increase your company profile or to provide an exit strategy as business owners, we can assist you to evaluate the suitability of an AIM or PLUS Market (formerly Ofex) listing to achieve your goals and guide you through the whole process. In some cases this can involve looking at the structure of your business and your business plan. In others, we can assist in arranging pre-IPO or pre-placement funding.

As well as being the prime point of contact and conduit to the nominated or corporate advisors, brokers and lawyers you will need to progress a flotation, we can arrange and manage your relationship with Reporting Accountants, preparing the various reports required and reporting on capital adequacy, financial systems and profit forecasts. We also have access to tax specialists that can advise on the tax implications of your flotation.

Aim or PLUS?
While it seems impossible to pick up a business magazine at the moment without reading about the fortunes of the Alternative Investment Market – or AIM – there has been scant media attention paid to an interesting alternative: the PLUS Markets Group, or plain PLUS. Yet PLUS is gaining in popularity, with over 200 companies “PLUS quoted” and more than 800 organisations using PLUS as a secondary market (“PLUS listed”). There are over 1,600 companies quoted on AIM, with more than 160 joining so far in 2007, compared to nearly 40 new quoted companies joining PLUS since January 2007. So who is PLUS suitable for, and what benefits does it offer companies looking to be listed?

PLUS Pointers
PLUS, a completely independent equity market based in the City of London, offers a unique disclosure-based regulatory framework. PLUS started life as OFEX but was renamed and relaunched under new ownership in 2006. The new management has ambitious plans for the market, including seeking to fill the requirements of smaller companies that they feel are being left out by AIM’s tendency to be more heavily regulated and its shift towards larger companies.

PLUS is of particular interest to smaller companies looking to float, for whom AIM, and certainly a full stock market flotation, would be too much to undertake. For companies deterred by the potentially high cost of flotation on AIM – usually upwards of £300,000 – PLUS can be an easier route to Initial Public Offering (IPO) and a less costly way of raising finance. The average market capitalisation of a PLUS quoted company is just over £10 million - significantly lower than on AIM where it is now over £65 million.

Flotation is not just about attracting an extra injection of cash into a business to fund growth and development, however. It marks a sea-change in the way a business operates and should therefore never be entered into lightly. PLUS can offer more of a ‘toe in the water’ for companies still unsure about floating. No one should underestimate how fundamentally flotation impacts on every aspect of the business. Business leaders will go from getting on with their business with little interest from outside in how they run things to finding themselves forced away from their comfort zone to talk to advisers, potential investors and the media. Psychologically, relinquishing some of the control of the company is tough too. While flotation may be the right choice, any company thinking of doing so should consider all the alternatives first. This is one reason why a PLUS flotation can be a good option for companies that may prefer a more low key entrance to the markets and a less heavily regulated environment.

Going to Market?
While AIM offers a simpler route to flotation than a full stock exchange listing, companies still need to count on a lengthy process during which time they will be pulled away from the heart of the business to focus on the flotation itself. A whole support team from nominated advisers (Nomads) and brokers to lawyers and PR professionals will also need to be engaged. All this is fine as long as the entrepreneurs behind the company’s success are sure that AIM is right for them. PLUS, however, offers a gentler introduction to the markets. As literature published by PLUS puts it, the market offers “an environment where management can devote as much energy as possible to doing what their shareholders want them to do – to run the business.’’

PLUS boasts a clear and straightforward admissions process, which can usually be completed in three months or even less. A prospectus is necessary only if raising more than €2.5 million. This can mean that it can be utilised as an alternative to pre-IPO fundraising which may otherwise be more difficult and costly. While the admission process to PLUS is deliberately flexible to encourage companies, all businesses wishing to float on PLUS need to:

• satisfy requirements – for applications not accompanied by an admission document, each application will be reviewed by an application panel comprising city practitioners and industry experts;
  
• appoint a PLUS corporate adviser, typically a corporate finance boutique, investment bank, accountancy practice or law firm approved by PLUS. The corporate adviser ensures that eligibility criteria are met and that the company is suitable for admission;
  
• demonstrate appropriate levels of corporate governance – which means having at least one independent non-executive director;
  
• have adequate working capital (12 months minimum);
  
• have no restrictions on the transferability of shares;
  
• issue shares which are suitable for electronic settlement.