Leading North East commercial law firm Muckle LLP is advising North East businesses to consider using the Alternative Investment Market (AIM) to raise finance for growth.
GROWING firms seeking funding often only consider venture capital or bank finance, both of which have been difficult to access recently.
Whilst the new £125m Finance for Business North East Fund – formerly known as JEREMIE – will help many small businesses, those looking to raise over £5m for growth have been finding it challenging recently.
For the right company with a strong management team and a clear, Muckle LLP is recommending that businesses consider at raising finance by the placing of shares on AIM. Institutions which invest in companies on AIM have ample cash at present. Interest rates are low, so the only way they can achieve the returns they need is by investing in companies with good potential.
Andrew Davison, partner at Muckle LLP, said: “There’s never been a more important time for business to consider new ways of accessing capital for growth, particularly considering that venture capital and bank loans can be difficult to access in the current economic climate.
“AIM presents a real opportunity for North East businesses. Many of the companies which are growing quickly at the moment are doing so through acquisition assisted by access to the capital markets through the stock exchange. Once you have a group of institutional shareholders who have confidence in management and their vision, they will continue to provide further funds when required.
“One success story for the region is Vertu Motors plc, which has raised funds by way of a placing of shares on AIM three times now to provide it with the cash to buy dealerships, expanding its portfolio in the process. This led to it winning the ‘Best Use of AIM’ Award in 2009.”
Muckle LLP worked alongside nominated advisers Brewin Dolphin to advise on a series of fundraising by Vertu Motors plc for an expansion and acquisition programme set to help increase the motor dealership’s target turnover to close to £1 billion. The latest round was £30m, raised last summer.
Robert Forrester, chief executive at Vertu Motors plc, said: “Muckle LLP offered excellent support throughout this transaction and have provided expert advice since we were established three years ago.
“We have already successfully integrated our previous acquisitions and plan to use this funding to invest in new dealership operations and extend the productive capacity of existing operations, maximising our market share in the coming years and continuing our growth.”
Nick Owen, head of Corporate Broking at Brewin Dolphin Investment Banking, said: “A listing on AIM can be a major driver in the development of any growth business. In challenging market conditions, the increasing opportunities for market consolidation in some sectors under a strong and highly experienced management team can prove attractive to investors.”
Marcus Stuttard, head of AIM, said: “Over the fifteen years since its launch, AIM has become a magnet for enterprise, drawing in dynamic companies from across the UK. As the market continues to mature, it remains the only growth market in the world with the critical mass to provide companies from a wide range of sectors with access to capital, not just at IPO but throughout their time on the market. At a time when debt finance can be unavailable to growth companies, the ongoing access to equity finance AIM provides will be vital to companies, the real economy and economic growth.
“We will continue to work with the North East’s vibrant advisory community to help ensure more ambitious local companies are able to use the Exchange’s markets as a springboard to their future success”.
Andrew continued: “It is great to see businesses like Vertu Motors plc benefit from accessing funding through the stock exchange. We worked closely with the company at every stage of the process as our team has a fantastic track record in helping firms consider the suitable options for growth.
Although an IPO on AIM at present may not deliver the same valuation of a company as it would a few years ago, it can be the launch pad that enables growth and a significant increase in the value of the shares retained by management.
There are several markets at present where consolidation is possible for the right management team. AIM can be the best way to raise the funding to make it possible.
“We are committed to supporting businesses with high aspirations and would advise anyone looking to access finance to come in and speak with our specialists for tailored support.”
For more information on how Muckle can help your business, please telephone 0191 211 7777 or visit Muckle LLP’s website
www.muckle-llp.com
