London’s smallest quoted companies have often struggled for investor attention, and the announced closure of
On Monday, Plus announced that discussions over a sale of its business had failed to yield any offers and the business would be wound down over the next six months. The news sent shares in Plus itself plummeting but for many of the companies quoted on Plus, there was barely a murmur in their share prices.
This illustrates perfectly why Plus has found itself in such a pickle. Liquidity on the market has been woeful. Of the 156 companies quoted on Plus on Monday, half saw no trades at all in their shares during the month of April according to the latest Plus statistics and only 21 companies saw aggregate trades worth more than £20,000 over the whole month.
The 10 most actively traded Plus companies in April
|Company||Ticker||No. of bargains||No. of shares||Total value of trades (£)|
|Eden Research plc||EDE||83||2,053,110||444,048|
|Adriatic Oil plc||ADOP||19||22,816,666||389,150|
|Rivington Street Holdings plc||RIVP||15||219,421||26,031|
A process of ‘orderly closure’ is expected to last six months, but investors wishing to withdraw from Plus-quoted companies are unlikely to find a proper market for their shares, particularly in the most infrequently traded shares. Some companies may move up to Aim, but only those with the deepest pockets. In recent weeks, environmentally friendly agricultural chemicals specialist Eden Research joined Aim and this week software business Ideagen confirmed its plan to move to follow suit.
Others who may be tempted include the likes of Stieg Larsson trilogy publisher
The passing of Plus will leave a hole, as BDO’s Corporate Finance Partner Chris Searle said: “The demise of Plus is going to make it even more difficult for smaller companies to raise capital at a time when bank lending is tight.” Markets such as Sharemark, which has access to the Share Centre’s 200,000 retail investors, may be able to act as a platform for raising funds.
Brave investors could find some value by picking up companies such as Quercus while they are quoted on Plus in the hope that a move up to Aim or the Main Market results in a re-rating of its shares. We previously recommended Quercus due to its lowly rating, decent growth prospects and dividend yield. Results are due later this month and an AGM statement in June, by which time management intends updating investors.