The South-West has seen a number of its home-grown companies go public. Nick Reeve looks at some of the big success stories.
In recent years, several companies formed in the South-West of England have been listed on the LSE's Main Market and AIM. A notable example was financial services firm Hargreaves Lansdown, which was started by Stephen Lansdown and Peter Hargreaves in the early 1980s. It was floated on the Main Market in 2007 and is now a FTSE100 company worth around £3bn.
More recently, Devizes-based Rockhopper Exploration, which listed on AIM in 2005, has achieved a high public profile related to its licences to explore for oil in the North Falklands Basin. Despite well-publicised concerns about security in the region, it has achieved a market capitalisation of over £500m.
Closer to our hearts at Smith & Williamson is the tremendous success of our long-term Bristol-based client, Albemarle & Bond. The firm was admitted to AIM in 1995 at an opening price of 11p and has recently been trading at close to £4, with a market capitalisation well over £200m.
Nomad to AIM companies
The Bristol office of Smith & Williamson has acted as Nomad to many companies since the launch of AIM in 1995, and we continue to offer the service today. In fact, we are one of only two Nomads in Bristol.
Like most AIM companies over the past three years or so, our clients have had to deal with difficult trading conditions, but most have survived the recession – and some are now beginning to thrive. A good example is cosmetics firm Swallowfield, one of the biggest employers in Wellington, Somerset. International expansion for the company is underway and, despite a rocky couple of years, the future is now bright.
A brighter future?
At Smith & Williamson, we look forward to a recovery in the markets so that IPO activity can continue. AIM was formed to provide a public market for small trading companies with high-growth potential. But risk-averse investors have largely shunned such companies since the credit crunch.
We believe that particularly following the improvements next year to the EIS and VCT regimes (which will enable many more potential AIM companies to benefit from tax breaks for investors), opportunities to take advantage of the many benefits that can flow from a public listing will improve significantly.
The values attached to businesses when they 'go public' are likely to be much lower than they would have been before the credit crunch. But the benefits of a public listing are for the long term and the value attached to an IPO should not be the only consideration when making such an important decision.
New equity funding rules
From 6 April 2012, the annual limit on the aggregate of VCT and EIS funding for qualifying businesses will rise from £2m to £10m. This will give individuals the chance to invest alongside VCTs and other investors in much larger fundraisings through the EIS, while still offering significant tax breaks.
As well as an increase in the annual investment limit, the number of full-time employees in a qualifying business will rise from 50 to 250. Moreover, investors will be able to invest in businesses with maximum gross assets before investment of £15m, up from the current level of £7m.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
