aim
“Investors are looking for a growing business operating in an expanding market.
“Almost any sector works, it’s more about the quality of the company. In commercial terms, a successful IPO candidate must demonstrate quality, good governance and value.”
Several delegates were interested in the operations and processes involved. Stevens said: “The proportion of the senior executive’s time devoted to preparation is high – up to 70%; so it’s sensible to bring in a finance person, or an IPO team to ensure the basics of the business can carry on.”
Tim Davis, Cantor Fitzgerald
Davis’ key message though was: “We will not take a company to market if we don’t feel it’s ready. There’s a time and a place to maximise the share sale.”
With regard to valuation, we have to agree on what a company’s worth. “If we fall out it’s usually because management are coming in too high on valuation. We spend months on getting this absolutely right,” he said. “We look at the here and now, what you can deliver in the coming year; what we know we’ve got in the bag for the next 12-18 months; and what we think we can do in that time.” His advice: “Don’t go too high.”
Davis said that AIM is the international stockmarket for growth companies, but stressed that IPO is another stage of development, not the end of the journey. “When you float your business, part of the transition is the mindset, in that you’re no longer your own boss and you now have critical external investors owning part of the business. It doesn’t follow, however, that going public you’re giving up your independence.”
Tim Davis, senior adviser at Cantor Fitzgerald, premier capital markets investment bank, said AIM is for the minority – it is not a one-size fits all. In terms of sectors though, he says: “We’ve got all sectors represented – even a firm of lawyers.”
Naming Gateley plc as the firm in question, he asked: “Who would’ve thought that a firm of lawyers would list on AIM? It does seem fairly improbable. The reality is that it was a long- held strategic desire by the partners at the top in that they wanted to break the mould. But most of all they wanted a currency – for the partners to sell or buy shares, and to make acquisitions and grow the business. When they came to market the media was all about organic growth and they have already opened up in Reading, across the UK and in Dubai.
“So what makes an attractive IPO? At Cantor Fitzgerald we have a very simple philosophy,” said Davis,” in that when we listen to a company presenting to us, we sit back and think, ‘would we put our own money into this business?’ We take a straw poll after the meeting, and if it gets more than a 75% vote it gets the thumbs-up.”
He then empahsised the importance of open and honest communication, saying: “As a listed company you have an obligation to tell the market anything that is vaguely relevant.”
In managing relations with the outside world, the golden rule is: “Keep the market informed”. He said always be honest, open, available and communicative. Newsflow is critical, and there must be no surprises, or sudden or unexplained problems.
James Austin Business Growth Fund
solution for growing companies, where the business received equity funding while listing.
He explained that BGF is an independent company that was established in 2011 to help growing SME businesses. Backed by five of the UK’s main banking groups – Barclays, HSBC, Lloyds, RBS and Standard Chartered – it has up to £2.5b with which to make long-term equity investments.
Today BGF has the largest investment team in the UK. He said. “A lot has changed in the past six to nine months. We’ve scaled up again and now invest in 30-40 companies and support in the region of 120 equity transactions per year.
“We do a number of things but the interesting bit is we’re offering a hybrid solution between bank debt and full equity fundraising.
“Our mission is to unlock the potential of fast-growing UK businesses that need long- term capital to drive their success, and we are looking for companies that have robust and realistic expansion plans.
“Simply put, we’re looking for companies who’re trying to grow, so my advice on taking the BGF route is: let us have a look at it. It might well fit us, even though you don’t think in does.
“We offer a tremendously exciting opportunity for growing companies in that we offer a highly-collaborative approach to financing growth, and work very closely with the companies we invest in.”
Permeating through the seminar was the overriding message that being publicly listed brings a lot of benefits, but that flotation takes time and preparation and can’t be rushed. As Stevens said: “Invest in the market and it will invest in you.”
Rounding off the sessions was James Austin, investment director at BGF, who said that as equity providers, BGF could be part of a hybrid
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THE BUSINESS MAGAZINE – THAMES VALLEY – DECEMBER 16/JANUARY 17
businessmag.co.uk
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