PLUS Market an alternative to the AIM Market

Thinking of an IPO, have a look at your options, an AIM listitng will cost you £200k a year a PLUS listing will cost you £50k, thats a lot of cash for a new listed company. The Post below takes you through the PLUS market.

PLUS Markets is rapidly gaining favour among advisers and CEOs of ambitious, entrepreneurial companies. James Harris finds out why

The word around the markets is that PLUS, the small- and mid-cap stock exchange, has fared better than others, and proved resilient in the recessionary storm. As a result, the market is attracting much more interest.

Companies on PLUS tend to be capitalised at less than £50 million. This is seen as a factor in the market’s growth as it means these ventures are on a market with similar sized businesses, which helps increase their profile and visibility among investors. ‘Our focus on growth companies is meeting a real need in the market,’ explains PLUS Markets’ Vivienne Cassley. ‘Companies can trade on our market knowing they won’t be competing against lots of billion-pound businesses.’

Recent successes include 3D Diagnostic Imaging, a developer of scanning technology. The company has raised more than £2 million since it was admitted to PLUS in April, while business training company Winning Pitch has seen its turnover increase by 43 per cent since its December 2007 listing.

The total market capitalisation of the companies quoted on PLUS (around 200 at the end of August) increased by 34 per cent to over £2.5 billion in the first half of 2009. While set up to attract entrepreneurial-sized companies, it’s fair to say that PLUS also has its fair share of heavy hitters, not least RAK Real Estate, which listed in February via a reverse takeover with a market cap of £600 million. The next biggest company on the market is football club Arsenal Holdings, valued at £470 million. ‘A lot of the new entrants have tended to be more established companies,’ observes Karen Gilbert, also at PLUS Markets.

Strictly business

Many cite a lighter touch to regulation and the lower fees as a major factor in why PLUS is managing to tempt business away from the Alternative Investment Market (AIM), the junior market of the London Stock Exchange. While AIM fees and compliance can cost up to £200,000 a year, the average annual cost of a listing on the PLUS-quoted market is a more modest £50,000.

But maintaining the quality of the companies on the market is key to PLUS’s success, says Cassley: ‘Regulation is appropriate to the size of our companies. Everything is there to protect investors but we keep it simple. The emphasis is on allowing companies to generate returns for their shareholders while not tying them up with red tape.’

The exchange is also gaining ground internationally. Around ten per cent of the market consists of non-UK organisations, and as Gilbert notes, ‘International companies on PLUS are from all over the world and from many different sectors. While our focus is very much on building the market for growth companies in the UK, international companies are also important to our business.’
One of the thriving international companies on the market is China CDM, a carbon emissions broker admitted to PLUS in December 2006. The company’s market cap has soared from £25 million to £86.3 million, and it has raised £15 million since coming to market.

The growing popularity of PLUS means it is now seen less as a gateway to AIM and more as an important market in its own right. ‘With four new advisers joining the market this year and a really strong pipeline of companies, we are really building momentum,’ says Cassley. ‘People are taking notice and advisers are adding PLUS to their toolbox.’

To e-mail Vivienne Cassley click here
Capital Markets,
Standon House,
21 Mansell Street,
London E1 8AA
Tel: 020 7553 2033

pitching to an angel Investor

A source of funding for the 50k to 500k investment can be the Angel Investor this is some information to help you get started.

To start what are Angel Investors?

An angel investor or angel (also known as a business angel or informal investor) is an affluent individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small but increasing number of angel investors organize themselves into angel groups or angel networks to share research and pool their investment capital.

Some resources to find Angel Investors:

www.angelinvestmentnetwork.co.uk
www.theangelinvestor.com
www.angel-investors.
www.swain.org.uk
www.go.uk.com

How to pitch to an angel

In today’s turbulent economic climate, securing business funding can be a minefield for entrepreneurs. With credit from banks drying up, many small business owners are turning to alternative forms of funding such as angel investment. However, this can put added pressure on those who are not used to ‘promoting’ their business in front of potential investors. Here is a list of top 10 tips to help entrepreneurs deliver a successful business pitch:

1. Elevator pitch – Business owners should be able to pitch their products or services in any circumstances, even when they have a very limited amount of time. An elevator pitch is a quick, yet comprehensive, overview of a business short enough to be delivered in the time span of an elevator ride.
2. Prepare – As Mark Twain said “It takes more than three weeks to prepare a good impromptu speech.” Pitching to a potential business angel could dramatically change the future of a business. Preparation is key to take advantage of this opportunity.
3. Setting up the stage – If possible, it’s always ideal to prepare the room of the meeting well in advance. This is especially important if the pitch includes a product demonstration or the use of multimedia aids.
4. Look your best – A common concern for small business owners is choosing the right clothing for a pitch. Wearing a suit is usually preferred as it shows a level of respect for a potential investor. A general rule of thumb is that in these circumstances you can never overdress!
5. Know your numbers – When looking for investment, small business owners should know their accounts inside-out and be able to discuss them with investors in detail. Commit key figures to memory and prepare a one-side ‘crib sheet’ to avoid forgetting crucial information due to nerves.
6. Have a clear strategy in place – A solid business plan that identifies the strategy is crucial. The plan must contain a commercial idea which will provide an eventual profit for investors or, as a minimum, sufficient profit to repay the interest and the principal on a loan.
7. Product vs. People – Investors are interested in not only the product, but also the marketplace, the competition, the management team, the eventual exit strategy and of course the entrepreneurs themselves. Business angels are investing in people as much as companies, as they plan to work together over the long term. Establishing a rapport with the potential investor is key to a successful partnership.
8. Care – Business angels invest their own money and they would expect to see business owner putting themselves on the line for their project. If an entrepreneur doesn’t show commitment to what he/she is doing, why should investors?
9. Be honest, even about tricky subjects – A question that angel investors frequently ask is “what are the risks in this business?” Small business owners must be prepared to discuss contingency plans and potential difficulties the business could face. Angel investors will appreciate a realistic assessment and honest responses as opposed to a rose-tinted view.
10. Feedback – Regardless to the outcome of the pitch and if funding gets secured, receiving feedback from potential investors it’s invaluable. Entrepreneurs should be prepared to receive negative feedback and take it on board to refine their business ideas.

Finally, remember, no small business owner is alone. The support of experienced investment agencies and other professional advisors should not be understated. In addition, if small business owners prepare thoroughly and follow these best practice tips they will be well-placed to successfully attract potential investors despite the downturn.

By Michael Weaver is chief executive of business investment agency Beer & Partners.