As the City’s leading Financial PR advisor on IPOs, Abchurch keeps a close eye on trends

With the current IPO market somewhat uncertain as a result of Brexit, investor confidence in companies looking to list on the London Stock Exchange is difficult to gauge.  Despite the total number of listings being approximately 50% down on this time last year, the environment within which the successful floats have occurred is important to note.  Whilst high profile floats such as Misys have hit turbulent headwinds and been forced to shelve their IPO plans in recent times, others have flourished in demanding circumstances.  Hollywood Bowl Group, the operator of bowling centres, completed their IPO with a market capitalisation of £240m; Autins Group, the insulation company, floated on AIM raising £26m; and Luceco plc, the British electronics company, listed at a market capitalisation of £209m earlier this month.
 

London’s Q4 IPO landscape continues to look resilient with three noteworthy floats: ConvaTec Group Plc, the medical products company achieved the largest float of the year with a market cap of £4.39bn; FreeAgent Holdings plc, provider of cloud based SaaS accounting software solutions for small UK businesses raised £10.7m with a market cap of £34.1m; and Filta Group, the kitchen specialist raised £6.2m on AIM with a market cap of £22.4m.  GoCompare.com, the price comparison website also intends to float on the LSE for around £400m following its successful demerger from Esure. In fact, over 27 companies, including TimeOut and Hotel Chocolat, had floated on AIM by H1 2016 for a combined value of $1.2bn – a 72% increase on the same half the previous year.  Moreover, the average market cap of AIM companies has been growing steadily and is now at an all-time high of £83.0m in 2016.  These trends empirically validate the position that, whilst Brexit may have temporarily affected IPO confidence, there is still a healthy appetite for companies going public on the London markets at a realistic price.

This notion of market resilience is endorsed by the head of Ernst and Young’s IPO leader for UK and Ireland, Scott McCubbin, who predicted earlier this month that there will be a resurgence in UK IPOs in 2017 as companies and investors acclimatise to post-Brexit market conditions.

With interest rates remaining in the doldrums, Abchurch believes that the London Stock Exchange will remain a highly competitive exchange for future IPOs in the final quarter of 2016 and looks forward to more IPO activity in 2017. 

Asian Companies Listing on AIM

In the past few decades, the Chinese economy has experienced phenomenal growth. And while growth had since slowed, it can’t be ignored that in 2014, China became only the second country in history (after America) to achieve economic output in excess of $10 trillion. In fact, even at the current rate of growth, China expected to surpass the US as the world’s largest economy within the next two decades.

It is no wonder then that foreign investors have been looking for ways to benefit from the Chinese success story. And there are plenty of Chinese investment opportunities right here in the UK. SMEs in China have long struggled to secure capital from Chinese banks and that has sent them elsewhere, including London’s AIM market.

But more recently, the reputation of Chinese AIM listed companies has taken a serious hit. It seems that after a few scandals involving Chinese companies, the market has lost faith in all of them. The problem for most Chinese companies therefore seems to be the result of suspicion and rumour. Of course, this is unfair – the Quindell and Tesco scandals have not resulted in investors blacklisting every UK Company.

So the question is, what can Chinese companies do to increase their appeal to UK investors and continue to tap a valuable source of funding through the AIM market? The simple answer: Transparency. After all, the best way to quash suspicions and rumour is by getting the truth out. So for any Chinese companies listing in London, effectively communicating to potential investors from the beginning is critical – and there are plenty of ways to do this.

The suspicions surrounding Chinese companies listing in London are largely fuelled by a literal lack of visibility. So first and foremost, Chinese companies seeking admission to the London Stock Exchange need to bear in mind that potential investors are based abroad and therefore not able to directly observe the day to day operations of the business. Transparency, achieved in part through increased publicity, is therefore key to bolstering investor confidence.

But an effective communications program requires much more than reaching out to the UK national and investor press only briefly ahead of the IPO. Companies need to communicate through wider media outlets and for a longer period of time in the build up to Admission in order to achieve a successful and hopefully oversubscribed fundraising.

One way to do this is by launching Corporate profiling exercises on the home front. Even when targeting a predominantly overseas audience, the relevance of local and trade press coverage should not be underestimated before an IPO.

This is particularly salient for smaller companies. UK journalists are unlikely to have heard of an Asian based SME considering an AIM IPO. If British journalists can discover an existing profile through good trade and local press coverage (and where appropriate a social media profile) as they go online for further information, it will increase the likelihood of positive UK press coverage at IPO.

Local media coverage is also important for investors, as it plays a key role in reassuring their confidence. If a company attempts to promote itself amongst UK investors without an already established press profile, it could make a company’s story, no matter how compelling, harder to believe. And given the current climate of suspicion, that is risk Chinese companies simply can’t take.

Simply put, a proactive communications program is strong evidence of a company’s willingness to honour its commitment to new and existing shareholders. And, perhaps more importantly, increased transparency will help reassure investors and help regain trust of the market. This strategy will not only help Chinese companies: With London seeking to cement its status as the world’s leading financial centre there is simply no way investors here can dismiss companies operating in a country set to become the world’s economic powerhouse.

Follow us on Twitter @AbchurchComms

Scottish Referendum vs. UK Election: Return of the IPO

In the last 12 months, two political events have succeeded in concerning the CityFirst the September 2014 referendum was called on Scottish independence, and brought with it a wave of populism not seen for generations. With the SNP and the calls for an independent Scottish state, came the first internal threat to the makeup of our country for centuries, and with this threat, came fear. Fear of a devalued currency, fear that the face of commodities in the UK was about to change, and fear that some of the Country’s great companies were going to have to be described as ‘English’ or ‘Scottish’ rather than the ‘British’ in which they had revelled.

Having attempted a feigned indifference for over a year, financial institutions finally scrambled to limit the damage. The first noticeable victim was the value of the Pound. Having stood strong against the Dollar for some time, it saw a sharp decline to a then seven month low. Next, an almost overnight drying up of IPO work. Concerned by uncertainty, the roadshow wheels grounded to a halt, with businesses deciding to take to the water once a yes / no decision had been made.

Following the no vote, an audible sigh went up in EC2. Within a week, £3 billion’s worth of deals were mooted. From Aldermore to Jimmy Choo, there was a spring in the step of the City again. However, with the election this month, the City again came to a juddering halt. Populism had been caught south of the border, and following the SNP into battle was UKIP, another party not ruled by sense, but by ideals. Between them, and their disruptive might, they threatened to turn the 2015 general election into a fight from which it seemed there could be no winners. With a hung parliament seemingly an inevitability, the bids to woo bedfellows became more important than offering the country sensible policies.

For several fear inducing weeks, especially to the world of finance, it seemed that the only realistic solution able to get over the line would be a Labour/SNP coalition. Even the Conservatives, for years the bastion of business, had to make drastic anti finance moves to appease the blue collar workers it has promised to help. The banking levy, recently raised from 0.156% to 0.21% of all debt held in UK banks. Seemingly inconsequential, but has seen HSBC, one of the country’s leading institutions, making unveiled threats to leave the UK, reverting to its original headquarters of Hong Kong. From the thought of insecurity, markets all but closed. For almost a month, the City was devoid of many IPO’s with companies being warned by advisers that their fundraisers would be very difficult. The Stirling plummeted again, with many believing that $1.40 would have been more than possible if ugly scenes and recrimination had followed on 7 May.

However, markets are resilient, and populist parties live and die by the frenzy they create. UKIP, at one point claiming potential victory in 40 seats, came away with only a solitary voice, Carswell in Clacton, with even their leader barred from Westminster by the voters of Thanet South. Even with the SNP’s astonishing numbers north of the border, the unexpected rout of Labour around the country led to a combined total of 288, nowhere near enough to damage the Tories. In achieving 331 seats, David Cameron achieved something that no PM with over 18 months experience has done since 1900, increasing his margin of victory from the start of his incumbency.

From this, the City took heart. Money and goods has been traded within its walls since the Roman’s first came to this country, and the election could never truly stop this. World Wars, disease, and political turmoil far greater than that seen today have not immobilised finance, only pausing it, and therefore, the only likely casualty of this election will be the bankers’ summer holidays. Hindsight of the Scottish referendum shows us just how quickly institutions can dust themselves off. History is a long study of applying hindsight to the future, therefore, come Summer, the wheels will be turning once more. With promises of floats already abounding, the City is already leaving the election behind.

Nevertheless, there is one final caveat. During the last parliament, the Conservatives, in a bid to appease their back benches and the increasing Eurosceptic population, promised an in/out EU referendum by 2017. This leaves the City in quandary. Nearly three quarters of those working within the Square Mile plan to vote in favour of staying within the European Union, and yet, as with the Scottish referendum before it, fear will descend on the City and quite possibly global markets again. With his slim majority, Cameron is acutely aware of his potential ‘bastards’ – Rees Mogg, Bone, Davies – all back bench heavyweights and therefore able to wield power in the future. Mark Reckless, the Eurosceptic and UKIP defector who was recently ousted from his seat in Rochester and Stroud, must be looking at the power his former colleagues now hold longingly. For this entire election, the public were sold a story that it would be the outside powers who would force the issue, the days of majority were over, with small parties for the first time ever holding the keys to Number 10. Ironically, the biggest threat to the City’s interests are now not from a raging bunch of Scottish and anti- EU populists desperate for financial blood, but in fact the very Government that EC2 was so happy to elect.

Follow us on Twitter @AbchurchComms

Weekly Wrap Up: Be "nice" to customers & reward shareholders

This week, the budget airline Ryanair reported unexpectedly positive results, with profits up 32%. These were unexpected as earlier this year the airline was forced to put out two profit warnings.

This round of positive profits were partly attributable to the warm reception of the company’s Business Plus product, as well as the low price of crude oil in recent months. It is also largely due to CEO Michael O’Leary’s vow earlier this year to cease “unnecessarily p****** people off” and be nicer to his customers. Examples of this p****** off included threats to charge passengers up to £5 to use the loos on planes, as well as to introduce “standing tickets” whereby some passengers didn’t get a seat so as to get more people on planes.

As one might have expected, this vow worked well, and Ryanair enjoyed a rise in passenger numbers of 12% in the current quarter, and 20% in the final three months.

The fact that his vow of nicety worked seems to have been a surprise to what some have termed: “the loud mouthed” businessman. Indeed, his new strategy has proven to be so much of a success that he has announced his intention to continue being nice to his customers – thank heavens for that.

Rather than sharing Mr O’Leary's surprise that his nice strategy worked, we're rather surprised that he hadn’t realised the customer centric approach had always been necessary. In any walk of business, whether  capital markets or otherwise, placing the individuals / organisations that you service at the core of everything you do is essential for commercial success, to earn a good reputation, survive the initial years and thrive in the later years. In an age where consumer loyalty has been work thin, corporate competition is at its peak. Companies are accountable for all that they do – social media is the first place a disgruntled customer will share any tales of woe. Companies must value their customers and work their entire business models around them. This will keep them happy and therefore keep them as customers. Supermarkets such as Tesco and Sainsbury are famously battling the same issue as Ryanair, and in response have been working to tailor their customers’ experiences to be second to none.

Similarly, whilst companies can benefit from treating their customers well, publicly listed companies must treat their shareholders so. With more and more companies coming to a market that is slowly but surely recovering, publicly listed companies must reward their shareholders to ensure that they stay the journey. The companies that perform best on the London Stock Exchange are those that place their shareholders at the fore by paying out regular dividends, communicating effectively and only making business decisions that will positively impact their shareholders.

The fact that Ryanair’s results made the news is not notable; they are a large, consumer facing company. The fact that Michael’s statement was featured in most headlines, however, is notable as it shows exactly how important placing customers / shareholders at the fore is.

Businesses should be constantly communicating exactly how they are placing their customers and shareholders at the fore so as to ensure that their good work is not going to waste. As pointed out by Forbes contributor Micah Solomon, visibility is one of the seven most important elements of having a truly customer centric business model. These days customers like and need to be rewarded for their loyalty, and so will be scanning the headlines for the companies that will do that. Stories of customer reward schemes and so on will therefore catch the eye and possibly custom.

There is an old saying that is often bleated by the elders of the world: “manners don’t cost you a penny”. This week’s headlines have never proven this point more effectively, even showing that in the case of Michael O’Leary, good manners can even gain you a lot. We look forward to seeing a bright future for the newly focused Ryanair.



This week Abchaps attended a very interesting event hosted by UK – Israel Business who hosted Avi Hasson, Israel's Chief Scientist, part of Israel's Ministry of the Economy. The event was attended by the UK Ambassador to Israel and the Israeli Ambassador to the UK. The panel discussed the huge trade links between the two countries and Israel’s highly successful tech sector and opportunities for English companies to tap Israeli expertise as well as Israeli companies to take advantage of the UK market, in particular the capital markets in London.

We also enjoyed Sanlam Securities' networking event and the Recombu Awards.



Chris Nicholls, previously an executive previously director at JP Morgan Cazenove, joined Deloitte as a partner of the equity capital markets team. 

KPMG expanded its Cyber Security Business by appointing Rob McElvanney and Steve Bates from IRM, and Lawrence Munro from Nebulas Solutions Group.

Guy Hill joined Sanditon Asset Management as its Senior Investment Director of the European investment team. He was the London head of Swiss equities team at Helvea.



The Lord Mayor’s Show is taking place on Saturday 8 November, with a procession from 11:00 – 14:40. The parade takes the flotilla, dancers, drummers and over 7,000 participants throughout the City of London. The evening is rounded off with a fireworks display over the Thames in the evening.

If you haven’t quite put Guy Fawkes celebrations to bed just yet then let us recommend the Battersea Park Fireworks. Tickets are £10 a pop but definitely worth while, with one of London’s best displays on offer. The bonfire is lit at 7:30 so make sure you leave plenty of time!

If you are a ruby fan, then head to the Famous Three Kings this weekend. 16 screens worth of Autumn International delight as England take on the All Blacks at 1430, Wales face up to the Wallabies, Scotland face Argentina and then finally at 1730 the Irish play South Africa.

Follow us on Twitter @AbchurchComms

Weekly Wrap Up: A Flow of Israeli IPOs

Is London well positioned to capture the next wave of Israeli tech IPOs?

There has been hype and a buzz in the City this week about the number of Israeli tech companies that are currently eyeing a listing in London. Companies include digital advertising company Matomy who now has ten global offices in Israel, Spain, Germany, Mexico, San Francisco and New York and employs 400 people. The Company is looking to raise £60m which will value it at between £200 and £300m. Another is digital advertising Company, Marimedia.

Israel, dubbed the 'start up nation', is the second largest source of innovation after Silicon Valley and is the third largest source of listings on New York’s NASDAQ. Global tech companies, Apple, Google, Intel and HP have been building up their research and development operations in Israel, making the country a major tech hub in its own right. Its leading tech companies have engineered cutting edge medical technology such as Given Imaging, a producer of swallowable camera pills.

Inspiring Innovation
Source: Oliver Thompson - Flickr CC

News of foreign tech companies, particularly from this innovative market, choosing to come to London to list is welcome news; London must do all it can to attract these companies. For too long London has failed to do so due to the lack of fund managers and analysts focusing on tech. Many argue that London’s capital markets are too immature in this respect when compared to NASDAQ or even NYSE, and until London sees a consistent number of tech companies floating successfully on the London Stock Exchange (LSE) then investors will continue to go to the US to tap into its attractive infrastructure, analysts and flourishing IPO market. Was it presumptuous of Joanna Shields, Tech City Chief, to claim in October 2013 that London had reached parity with New York when one of the most exciting companies and gaming giant, King chose to float in New York last year?

Nonetheless, London has been making positive steps to capture this market and the most attractive sector for growth. The LSE launched the “High Growth Segment” (HGS) in March 2013 with the goal of enticing firms to the market; companies wouldn’t have to comply with the usual free-float rules and would also be able to list by selling as little as 10% of their equity. This initiative has been received positively by fast growing companies, and according to Marcus Stuttard, Head of UK primary markets at the LSE, there is a rising interest in the broader IPO market. It is hoped that the arrival of Facebook and Google as established presences in East London will bring a new wave of commercial expertise. The government has also launched its Future Fifty scheme, designed to attract and support online entrepreneurs to push the UK into the front of the global race in this respect. These are all great initiatives, but more will be needed to ensure that London successfully rides the next wave of Israeli tech companies looking to IPO.



Abchaps welcomed Mazars Finance and Corporate Finance teams into our offices and heard about their focus on Israel, as well as their specialist sectors: media, technology and telecoms. We also entertained some special guests at Chelsea, who were victorious over Newcastle 3-0 at Stamford Bridge.



Love wasn’t the only thing in the air this week; promotions and new appointments were also on the cards at a number of top City firms. Our friends at Cavendish Corporate Finance appointed Joe Stelzer as a managing partner after four successful years at the Company.

Octopus Investments announced that Debu Purkayastha is to be their entrepreneur-in-residence at the fund management Company. No doubt he will use his previous experience at Google to drive the business forward with his keen eye for exciting new opportunities. In the legal domain, Pinsent Masons have also now appointed Michael Ruck as a senior lawyer in its corporate crime team.

Finally, following our client Lighthouse Group’s announcement last week that Rowan Dartington had been brought on board, the Group have also appointed Mark Evans as business development director, moving over from his senior executive position at Pearl Assurance.



'BitTag' – In a week where the burgeoning BitCoin industry was writ large across our newspaper headlines, our tech-loving friends over in East London introduced the ‘BitTag’ concept. BitTags are physical price tags that provide the consumer with a real-time indication of an item’s price according to market fluctuations, displaying both local currency and BitCoin value.

“Darling, you’ve left the BitTag on my valentines day present. This may have been a pricey gift at Harrods, but you could have got it at a knock-off price with BitCoin, you cheap…”



It’s the big Valentine’s Day today, so whether you have been struck by Cupid’s love arrow or are single and ready to mingle, the City is hosting numerous options for both love and lust...

Instead of gazing longingly into each others eyes over a candlelit dinner, get physical with some couples’ aqua zorbing or a ‘Lovers Leap Bungee Jump’! 

For you singletons, fear not – love could be found exploring the beautiful and the ugly at the Natural History Museum’s Valentine’s Day Night Safari. Alternatively, head to Bounce club for its anti-val, strictly no kissing, just ping pong night of partying!


Follow us on Twitter @AbchurchComms

Chinese companies an improving bet for investors

As the global economy gradually recovers, the investment community in London is expecting a vibrant capital market with surges of IPOs and M&A activity. For the City, IPOs of Chinese companies have gained increasing attention from advisers.

However, the question remains: why should Chinese companies list in London as opposed to listing in their own country, or even Hong Kong? What makes the London stock market attractive for Chinese companies to list?

A year of slower, but concrete, growth in China

Over the past year, investors have been aware of the stagnation in growth of the Chinese economy. In 2013 China experienced its slowest growth since 2000, with only 7.6% increase in GDP, and PMI dropped from 52.5% in November to 50.9% in January 2014. This was partly caused by the US Government’s decision to trim the quantitative easing that had previously encouraged inflows of ‘hot’ money into China. The Chinese government has also brought in tighter controls on shadow banking, including non-government backed banks. Shadow banking was a major source of finance for local governments to facilitate projects which were carried out to meet the central government’s growth initiative targets.

Such concerns, however, do not diminish investors’ optimism towards investing into Chinese companies. Many are attracted to the long-term benefits brought about by recent measures introduced by the Chinese government.

Government reforms drive share price as IPO moratorium is lifted

In November 2013, the Chinese government put forward what has been termed as the biggest “reform package” since the 1990s. One of the most significant changes was the relaxation of China’s strict “Hukou” policy (a policy restricting internal migration from rural to urban areas), which is expected to facilitate urbanisation. Another significant change was the easing of the One-Child policy. Both are expected to encourage much greater demands for consumer products in the future.

The Chinese government has long been attempting to rebalance its current export-dependent and investment-intensive economic model to a more sustainable one that will be led by internal consumption. However it will take time for these measures to come into effect. What is certain, however, is that steady growth will continue in China backed up by relatively concrete and sustainable economic activity.

Various industries have benefited from the recent introduction of these new government initiatives with many Chinese businesses enjoying share price increases. Consumer goods shares were amongst the obvious winners. Companies related to baby products, such as HKSE quoted Goodbaby International, as well as dairy products makers Mengniu Diary and Yashili International soared following the reform announcement.

With the Chinese government increasing its green targets to counter the environmental effects of urbanisation, other winners were those in the renewable energy industry. HKSE quoted Wind-farm operator China Longyuan Power Group Corp saw its share price increase by 86% over the year, whilst Hanergy Solar Group Ltd. saw an increase of over 100%.

Industries that are expected to perform well going forward include the insurance industry, benefited by the Chinese government’s relevant tax policies, and exporters, benefiting from the recovering US and European markets.

In late December 2013 China reopened its market for domestic IPOs, following a moratorium imposed by the government in October 2012 as part of an attempt to reform the capital markets in China. As a result, analysts have predicted 2014 will be a good year for the Chinese stock market. Coupled with confidence in the long-term consumer market, it should be an excellent year for Chinese companies to raise funds in China.

Variety and flexibility of listing in London contribute to continuing popularity

Despite these optimistic predictions, however, Chinese companies are still choosing to list overseas and particularly in London.

London certainly provides more exposure for companies that wish to “go global”. For Chinese companies wishing to expand their business to Europe, London is strategically important and is the undisputed City of choice for a European headquarters. The City of London’s strong track-record of dealing with Africa also makes it favourable for Chinese companies wanting to expand their businesses there.

Furthermore, as the world’s most established stock market, the market regulations in London are undoubtedly more predictable and reliable than the Chinese mainland markets. Stock markets in mainland China are still subject to regulatory changes which makes the market less predictable as regulators seek to mitigate overpricing in the market. Recently, five companies which had announced their intention to list in China have retracted their intentions and postponed their IPOs following newly released rules which strengthen government control on stock price valuations.

Another advantage of listing in London is the flexibility of the London Stock Exchange when compared to, for example, the Hong Kong Stock Exchange where the process is comparatively complicated. On average, it takes two years for a company to list on the Hong Kong Stock Exchange. For smaller companies, this might not be a viable option with the time and financial costs involved. London’s Main Market on the other hand is well-known as having a faster listing process whilst maintaining supervision over public companies. London’s Alternative Investment Market (AIM) also provides an important channel for SMEs to list, with simpler listing procedures and the supervision delegated in part to a Nominated Adviser (NOMAD), who project manages the new issue.

The increasing sophistication of AIM has also made it a more appealing option. In 2013, 25% fewer companies left AIM compared with 2012. £881 million was raised in equity, 70% more than in 2012. Government initiatives have now made AIM stocks eligible for placement in ISAs and these additional tax benefits make AIM-shares even more attractive to investors. In addition to this, from April 2014, AIM shares will be the most tax-advantaged of all investments with exemptions from inheritance tax and stamp duty.

London emphasises its pro-China position

David Cameron in China
to promote UK trade, 2013
Source: The Guardian

The UK’s desire to promote trade with China has never been more obvious. Stories on Chinese investment into the country, and vice versa, have been dominating headlines over the course of the past year, followed by David Cameron and Boris Johnson’s multiple visits to the country.

Although the number of Chinese companies listing in London has fallen slightly in recent years, it is anticipated that IPOs of China-based businesses will increase, particularly bearing in mind what London has to offer. Priding itself on being the world’s most established financial centre, London would certainly be a strategic option for Chinese companies wishing to gain access to international investors. The capital markets remain an interesting place to watch as advisers expect greater deal flow from China in the near future.

Canace Wong

Canace is an Account Executive at Abchurch Communications. Brought up in Hong Kong, she is fluent in Cantonese and Mandarin. Canace has a Master’s Degree in Philosophy and Public Policy from the London School of Economics and is a key member of Abchurch’s China and Asia team.

Follow us on Twitter @AbchurchComms

Weekly Wrap Up: The Key to Israel's Tech Success

Israel, often synonymous with the term “start up nation”, has over the past few years seen the giants of the tech world swallow up some of its best start up companies. Many commentators believe Israel is on a roll following Google’s payment of $1bn for mobile traffic app Waze, Facebook’s purchase of data compression company Onavo, and Apple’s acquisition of Primesense. Israel is now the second largest source of innovation after Silicon Valley and the third largest source of listings on Nasdaq after North America and China. For a small country always in a hostile environment, what is the key to its unparallelled success?

Perhaps the answer to that question lies in region of the country’s compulsory military service. The founders of Onavo, for example, served in the army’s intelligence division Unit 8200 prior to founding the Company; a Unite renowned for producing graduates whom are behind some of the country’s most renowned start ups.

The UK is now attempting to mirror Israel’s start up success by encouraging ex services personnel to launch their own businesses; examples can be seen in what are now thriving businesses, including Mergermarket, Trailfinders and Go Ape.

Similarly in the US, large companies such as FedEx, Digital Equipment Corporation, and Walmart were founded by former members of the armed forces. Ben Brabyn (former Royal Marine and founder of Heropreneurs) set up a charity designed to help ex force personnel to start up businesses. He extols Israel as a fruitful start up hotspot and states that it should be no surprise that it is recognised as such in a country where every citizen has to serve in the military.

Where Israel lags behind is that it has not grown its companies into big leagues because of gaps in management and experience, as well as a restless entrepreneurial culture that trumps exits over organic growth. However, this is beginning to change, and Tel Aviv as the tech cluster is pushing heavily for the government to relax visas so it can attract foreign skilled workers and to open it up to global talent.

The challenge is now for London to position itself as a city of choice for tech companies looking to list, and not lose out to the number of such companies that are currently choosing to go to the US. London must look to capture a slice of this pie and to attract companies to Silicon roundabout so as to further develop its own tech sector.

Britain’s bilateral relationship with Israel is enormous: two-way trade reached more than £3.81bn by the end of 2012, compared with the £3.7bn recorded for the previous year. Britain is on track for UK Trade and Investment’s target of topping £4bn by the middle of the decade. Such a relationship is invaluable to the UK and to London and will ensure London retains its competitive advantage.



Abchaps went along to the Proactive Investors One2One investor forum to view presentations by Mwana Africa plc, Edge Resources and NioCorp (on the recommendation of RFC Ambrian). The presentations were very compelling, reminding us of the importance of having a sociable CEO as the mouthpiece for a company seeking investment.

Always keen to learn more, we also hosted two market lunches to discuss how the City’s optimization is playing out the Tech sector.



Our friends at finnCap, currently number one broking house to AIM companies, have strengthened its offering with the launch of a new investment trust, thanks to two senior appointments - Paul Harrington, formerly of Westhouse Securities and James Simpson of Jefferies.

Baker Tilly also announced Rob Donaldson, previously of Baker Tilly, as its new head of Corporate Finance;  while Norton Rose Fulbright appointed Geoff Peters, formerly Freshfields Bruckhaus, as a partner within the Company’s energy M&A team.



If you ever fancied your chances as a bit of a Fred Astaire or Ginger Rogers, now is your time to shine. Head down to the Tea House Theatre in Vauxhall on Friday night for ‘Tails & Twirls’. Dance the night away doing the quickstep, foxtrot, rumba, charlston and some cha cha cha to a live band and vintage records. 

Alternatively, the get involved as Brooklyn Bowl, the iconic Williamsburg music venue / bowling alley, makes its European debut right on London’s doorstep. Setting its roots at the O2 arena it offers 12 bowling lanes, bar areas and food served from the famous New York restaurant Blue Ribbon.

Finally, if you wanted a quieter, more cultured weekend then head down to the Business Design Centre, Islington, for the 26th edition of the London Art Fair. Treat your eyes to the wondrous, contemporary art and design being showcased by a number of notable British artists such as David Hockney, Francis Bacon and David Shrigley.

Follow us on Twitter @AbchurchComms

What was really behind AIM’s revitalised 2013 performance?

There is a tendency in January to look back and become a little wistful about the previous year; the highs, the lows and all that seemed to run remarkably quickly in-between. Maybe it’s the influence of a little too much festive cheer (obviously, referring to the copious amounts of turkey).

There are now facts and figures (rather than just after-dinner chatter between Corporate Financiers discussing their Q1 / 2 pipeline) which detail the success of the AIM market in 2013. According to UHY Hacker Young’s latest AIM report:

• £881m raised (70% increase on 2012)
• 56 companies joined
• 25% fewer companies left (delisting or insolvency) than 2012. It is widely considered that the Alternative Investment Market is now competing with the FTSE main markets in terms of generating returns for investors.

What has changed to drive this growth?

Have increased regulatory sanctions aligning AIM companies corporate governance with those of the main market shed its reputation as the wild-west of exchanges? Perhaps the government’s effort to facilitate SME innovation, such as “patent box” tax breaks for biotech companies, have captured the imagination of investors? Or has the inclusion of AIM stocks in ISAs provided a fresh incentive?

Journalist David Prosser looks to another veritable driver as he questions whether the audience that AIM appeals to may be responsible for the ever-improving performance. AIM is a market of opportunity for “ordinary investors” to pick out overlooked and undervalued stocks that institutional investors have missed.

Whilst realistically the answer lies in the healthy combination of all these factors, there is one integral (and often undermined) point that has changed:

The maturity of companies coming to market

Maturity does not just equate to the amount of years a company has existed, but it can also be quantified in terms of wisdom and forward thinking; in other words, how thoroughly did the company anticipate and plan an eventual exit.

Companies are beginning to consider their exit from inception… they are not only concerned with profit margins, but also considerations such as working cost of capital and the maintenance of growth. They want to create the optimum final valuation of a well-structured Company that has water-tight Corporate Governance. These factors give investors more confidence upon entry into the public domain and later in the secondary market.

The investment story

The increased maturity of companies is also reflected by their decision to consider financial PR at an earlier stage during the IPO process. Companies are realising that their investment story cannot be created last minute. An integrated communication strategy should be prepared to position the company correctly to key audiences and manage market expectations of their stocks at an early stage. Some of the most successful IPOs of 2013 have proven the virtuous circle of commitment that exists between investment in PR, IR and share price.

An Abchurch client, SyQic, the fast growing OTT provider of live TV and on-demand paid video content across mobile and internet enabled consumer devices, demonstrated a successful flotation when it’s shares soared 30% on it’s first day of dealings following an over subscribed road show thanks to a well communicated investment story. 

Return to the status-quo

Many in the City are now looking ahead to 2014 with eager anticipation. What exciting, profitable and increasingly international companies are going to debut on the London junior market in 2014? The answer, in all likelihood, is many. And yes, there will be some that falter, but we must remember that this was the case pre–2008 too. The existence of one or two non-starters does not indicate the existence of a so called bubble in London markets, but rather a return to the natural status-quo. But as David Prosser pointed out, the AIM market is now a more dominant force and will continue to go from strength to strength.

Stephanie Watson

Follow us on Twitter @AbchurchComms

ISA investors take AIM

The government's decision this week to enable shares listed on AIM to be held in ISAs demonstrates that it’s now happy to ease investor protection in order to meet its desire for SMEs to have sufficient access to funding. It sees AIM investors as a potential source of cash that the banks are still loath to provide. This move comes amid confidence returning to the City and activity picking up.

This move is good news for SMEs who have struggled to source capital over the past few years. This is also good news for investors. It makes AIM shares one of the most tax-advantaged of all investments. In most cases, they are already exempt from inheritance tax. From next year, investors won’t have to pay stamp duty on AIM stocks, and the new rules now add income tax and capital gains tax exemptions to the list of benefits.

AIM has seen its highs and lows. Before the 2008 crash it was thriving as the City was beaming with confidence and large institutions were on the hunt for good opportunities. Hundreds of companies headed to AIM and in 2006 alone, £10bn was raised. When the crash took hold everything came to a grinding halt and the number of companies headed to AIM dropped dramatically. This year companies picked up just £337m of new money, a meager sum in comparison to the pre-crash hey days.

As confidence returns to the City this is good news for the junior market. AIM offers great profit opportunities. As Patrick Connolly from Independent Financial Advisor Chase de Vere says: "These companies are typically more dynamic and have greater growth potential than larger firms, which are often at the consolidation stage of their development. Over most reasonable time periods it is likely that smaller companies will outperform their larger counterparts."

Hopefully AIM will start seeing more success stories such as Majestic Wine and Asos, both of which have richly rewarded investors.

Alistair de Kare-Silver

Follow us on Twitter @AbchurchComms

Weekly Wrap Up: Facebook 'Likes' mobile advertising

On Wednesday, Facebook’s shares traded above $38 a share, the price at which it first sold shares to the public in May 2012. Facebook’s listing last year was one of the most eagerly anticipated floats in recent years but largely disappointed investors as its shares failed to rise.

What has driven up its share price now was the announcement that more than 40% of the company’s advertising revenues over the period came from mobile; a market that is growing enormously. New figures data firm eMarketer show that in the US in 2013, adults are expected to spend more time consuming digital media on their mobile devices than on their laptops or PCs. Yet Facebook’s predicament was that it failed to exploit this market until the latter half of last year. Last year in its second quarter earnings release, the company didn’t even bother to mention how much it made from mobile advertising.

It seemed that when Facebook came to the market there was a clear disconnect between creating a social networking site in a university dorm room and engaging with the market on Wall Street. The management failed to convince investors that it could increase profits and not users. Facebook did eventually wake up to investors' concerns and is allowing adverts in its news feeds and giving developers the opportunity to push their apps inside Facebook's own mobile platform. As a result, the social-networking company began to generate a growing proportion of its overall advertising revenues from mobile. The challenge for Facebook now is to maintain this momentum and to keep communicating to investors that its management is commercially sound and will keep taking advantage of this evolving market.



This week Abchaps attended the Reeves Corporate Advisory Summer Drinks on the Grange St. Pauls' Roof Terrace, The Tea with Investors Chronicle showcasing their digital products, and the amazing Darwin Strategic summer drinks party at The Royal Institution.



Baker Tilly has appointed associate director Alex Birch (previously of KPMG) to their restructuring and recovery team; whilst Eversheds has appointed Brett Rowland, specialist in intellectual property and pharmaceutical regulatory law, as partner in its London office.



“On this day”: New Facebook tab which enables you to creep back into your friends pasts. “On This Day” leads to highlights of your friends past activity, popular posts, birthdays and life events.



The biggest road cycling event ever in the UK is hitting London this weekend. RideLondon festival kicks off at 9am Saturday with FreeCycle. Cyclists of all ages, shapes and skill can take a spin around 8 miles of closed central London roads and soak up some of the capital’s famous landmarks and en-route entertainment. At 5pm, St James’ Park will host the Grand Prix races and will showcase the past and future Olympic and Paralympic champions of cycling.

The HOLI ONE Colour Festival is taking over Battersea Power Station this Saturday. Inspired by the Hindu Holi Festival to celebrate the arrival of spring, revellers are asked to turn up dressed in white where they will then be covered by clouds of coloured powder every hour from 2pm. This will all happen to an incredible cultural line up featuring some of the most impressive new electro DJ’s hitting the music scene.

Keeping to the sporting theme, the innovative street project Ping! London kicks off this weekend. For the month of August, London will see a series of 100-odd, free-play ping pong tables popping up in unusual and remarkable places. All you need to do is find a table, grab a paddle and play!

Follow us on Twitter @AbchurchComms

Say a prayer for the City’s new Wing

Whilst we City folk pray that the current deal-boom continues, a call is out for a ceremony to mark arrival of the City’s latest artwork. 

City bouyant on a wing and a prayer

It arrived with stealth, a giant diurnal bird of prey that embedded itself this week in the pavement outside our offices at 125 Old Broad Street, only its right wing showing above ground. 

Christopher Le Brun’s “City Wing” (pictured, right) stands around eight metres tall and sets the newly re-glazed office off very well.  It seems a shame not to allude to diurnal or raptors in the title if that’s where the concept came from - it marks the former site of the London Stock Exchange which is, of course, active in daylight hours and is at the top of the City food chain. 

But within sight of Brasserie Blanc, La Bourse and L’Entrecôte, will the Wing provide too much temptation to a budding climber?  Unlike Le Brun’s Wing Column monument to Victor Hugo in St Helier, the City Wing could offer three grades of climb to the light-headed, a challenging South face, a slightly easier Northern aspect with ledges and toeholds, and to the West, a 17-step stairway to heaven, which is where the hapless might well end up. 

Anyway, given Le Brun’s brilliantly creative and fantastic work - he was elected President of the Royal Academy in 2011 - and the effort that went into installing it, surely it deserves a proper blessing after four years in the making, as do those that will no doubt fall from it.  A City chaplain, a prayer book and a wing all in the same frame will also keep the City diarists and sub-editors busy! 

We won’t however be using it much for photo shoots - too easy for clever Charlies to make puns about our prized IPO clients winging it on to the Exchange...!

Julian Bosdet

 


Follow us on Twitter @AbchurchComms

Key insights into Chinese London listings

Today we hosted a China Advisor lunch in our London office to discuss the City’s reception to Chinese business and how it could be improved in the future. The idea for the event came about at the beginning of the year when one of our Chinese clients Camkids plc, based in Fujian province, received a spontaneous round of applause at the end of its presentation to a group of private client investment managers. The audience was clearly impressed to see this Chinese business performing ahead of expectations and the share price enjoying a healthy climb since its first day of dealing on AIM. We know that other Chinese companies do not always experience the same positive reception in London and were keen to find out what could be done to improve the situation.

The lunch was co-hosted by John McLean who has been involved in China since the late nineties and has significant experience as a UK Director of a number of Chinese businesses. He is also a Board member of the China-Britain Business Council and Chairman of VSO China. 24 China advisors and key influencers attended what was the first ever gathering of its kind in the City to address the specific issues of lack of institutional appetite, actions the City could take, and what Chinese companies wishing to list in London should do. Some guests gave short speeches which encouraged the debate; these included an analyst viewpoint of recent Asia deals, the LSE’s strategy towards China and institutional attitudes to Chinese business. Our office was transformed into a beautiful Chinese influenced dining space.

To get a better understanding of the City's opinions of Chinese business, we sent out a brief survey with the invitees asking three questions:

• Why is the investment community often reluctant about investing in Chinese business?
• What actions could be taken in London to improve this situation?
• What actions should a Chinese company consider to make a successful London listing?

We received a lot of very insightful responses and are currently undertaking a keyword analysis to determine the findings of the survey.

However, a snapshot analysis has given some interesting insights. The top reason given for the reluctance to invest was poor market performance, with corporate governance issues being a close second. Respondents to the survey thought that the best action London could take to improve the situation was better market/ City education for Chinese businesses, and the top-line action a Chinese company should consider before a London listing is to appoint English speaking Directors to the Board. While it is already a requirement to have at least one English speaking Director, it shows that the Chinese businesses may not be communicating their updates effectively enough.

We thoroughly enjoyed hosting the event and engaging in some challenging and thought provoking discussions; judging by the feedback that we have already received the guests had a great time and learnt a lot too. We look forward to hosting more events similar to this in the future.

Follow us on Twitter @AbchurchComms

2013: Cautiously Optimistic

As the City starts to come back to life following some excellent festive parties and a much needed break, the outlook seems to be improving for small businesses in 2013.

Access to capital

2012 was a struggle for many businesses with access to capital remaining tight and budgets being cut in an atmosphere of extreme economic uncertainty. So called “zombie companies” became apparent, just about breaking even and able to service debts due to low interest rates, but without enough capital to grow realistically. However a more stable global economy thanks to the Eurozone and US fiscal cliff deals alongside measures by the UK government to support small businesses could mean 2013 is a much more promising prospect for those that made it through 2012.

While the LSE’s junior market, AIM was down narrowly in 2012 compared with 2011, we are already seeing signs that 2013 is picking up for PLCs with a good growth story. Away from the public markets, there is a lot of interest in private companies with the EIS and VCT schemes making it easier for investors to get a slice of the action in companies that wish to remain private. In addition, if an exit within the next 12 months is viable and visible, institutional investors seem to be more willing to consider bridging the gap between private equity and public markets, providing businesses with the capital they need to grow and enjoying the upside of getting in before IPO.

Growth areas

Many advisers strengthened their natural resources teams toward the end of 2012 so we could expect to see growth in this sector, indeed four of the top five AIM companies by market cap are in this area. In addition, clean energy also remains important with the constant threat of global warming as evidenced by many of the freak weather conditions we saw last year. We are also seeing increased interest in medical devices, particularly diagnostics which could improve efficiency in a vast number of areas from drug development to day to day health management. We can also expect huge growth in technology and the shift to mobile has created a significant number of entrepreneurs from tech savvy youngsters with a great idea for a new app.

Just under a third of companies that joined AIM in 2012 were international and we expect China, Russia and other emerging markets to boost growth in 2013, with more international companies looking to the UK for investment.

Outlook

With David Cameron urging G8 countries to work together “firing up economies and driving prosperity” and business leaders believing the threat of a triple dip recession is receding, we could be in a position to capitalise on last year’s modest growth in 2013. We won’t have the expense of the Jubilee or Olympics (which nonetheless both went a long way to lift the public’s spirits in a difficult year) and begin the year in a much more settled and positive global economy. Confidence has been low over the last few years but the current business conditions and sheer will for things to improve means surely things are looking up for 2013.

Simone

Follow us on Twitter @AbchurchComms

How to IPO: advice for Cleantech companies

Event: London Stock Exchange Cleantech IPO Forum 2012

Date: Wednesday 20^th June

Location: London Stock Exchange, London, UK

On this picturesque British Summer morning, the Abchurch Cleantech team made the short venture across the City to
Paternoster Square and the London Stock Exchange for the 2^nd Annual Cleantech IPO Forum; a 'How to IPO' guide for cleantech companies considering floating on the Stock Exchange. Organised by Clean Energy Pipeline, we were pleased to be a sponsor alongside other IPO advisers Bird & Bird LLP, KPMG and Nomura Code Securities.

After arriving at the building and navigating through the rather intimidating revolving doors, we were greeted by the alluring aroma of coffee and breakfast pastries. As the clock struck 9, a great selection of Cleantech companies were ushered through to the auditorium where the conference commenced with a welcome note from Sam Rossiter, Product Manager of Capital Markets Events at the LSE. Kicking off the presentations was Axel Kalinowski, Business Development Manager of Primary Markets at the London Stock Exchange. He gave an insightful overview of the Main Market and AIM, the current IPO climate and the benefits of listing in London. Following Axel was Clean Energy Pipeline’s CEO, Douglas Lloyd. He spoke about the recent trends in the clean energy sector, highlighting that whilst 2012 may follow a similar dip in investment deals as in 2008/9, there is still a growing appetite for investing in the sector and it will continue to function as a major growth driver. The last speaker for session one was Ken Rumph, Director of Research at Nomura Code, who gave an eloquent presentation on what investors look for. Some of the key issues he raised included, first and foremost, that investors are looking to make money and that companies need to make their business case clear and concise; explaining why would people buy your product over competitors? A strategic approach would be to focus more on commercialisation and less on technology or green credentials - these can always be expanded later. Secondly, set out realistic milestones and plan ahead; make a checklist of things you are going to and have achieved. And finally, ensure you pick the right advisors; they need to understand the market, your underlying business model and have the chemistry to develop strong relationships. A Q&A session on public offerings concluded round one.

After a rejuvenating coffee and biscuit break, session two kicked off. First up was Connie Mixon from MyCelx giving a thorough case-study overview of the IPO process; from what to expect in life as a listed company on AIM. She similarly stressed the importance of your advisors, and in particular, how beneficial the Financial PR house was - comments which we greatly appreciated hearing! Bird & Bird LLP then navigated us through the legal issues of taking a company public. Matt Bonass and Vanessa Young addressed what to expect from the lawyers, the choices of market on which to launch and IPO preparation. Another Q&A session and coffee break and it was time for the final round. Gregory Hughes, director at KPMG, talked through the financial reporting pre and post-IPO. He highlighted the regulatory requirements necessary on the main market and AIM, the role of the reporting accountant, their work and deliverables. Key components included the construction of the Prospectus/Admission Document, the long form report (a core part of the financial and commercial due diligence for an IPO) and the ongoing requirements post IPO for both the company and accountant, e.g. financial reporting and interim management statements. Then it was Abchurch’s time to shine as our CEO, Julian Bosdet took to the stage. In a well-received presentation on how to IPO most succesfully, Julian informed the audience on how to communicate with investors and the media. He stressed the role of your financial PR advisor in helping to construct and roll out an effective, integrated communications strategy. The aim is to reach all target audiences through the press and analysts during an IPO – including all levels of investors, as well as employees, customers and industry partners.

The concluding presentation summarised a fund manager’s view with respect to investing in cleantech. Hyewon Kong from WHEB Asset Management explored the key themes and factors driving stock selection. There was a strong focus on sustainability; capturing new investment opportunities created by long term social, demographic and environmental challenges. They are not just looking for a product and how it brings benefit to the society and environment, but companies which provide real solutions to the challenges. These cleantech companies need to illustrate how they will maintain margins in an increasingly competitive landscape and have a focused strategy in terms of growth.

The resounding message of the conference on IPOs seemed to agree that while it is a volatile market at present and investment has seen a slight downturn as some fund managers concentrate on maintaining their current portfolio rather than investing in new companies, the cleantech theme remains a strong growth driver. In particular, investors like companies which are driven by regulation, as they may be somewhat insulated by the economic climate and public spending cuts. So, why IPO? Intial public offerings and life as a publically listed company offer enormous benefits; from increased access to capital to greater efficiency and corporate governance.

Overall, the conference was an excellent opportunity for companies to get a full grasp of how to IPO and what is involved in the IPO process, to identify the key players involved and what to expect when you decide to float on the Stock Exchange. For any ‘newbie’ into the industry, it acted as a constructive and worthwhile training morning, answering in great detail the popular "What is an IPO?" question. We heard the full IPO story directly from the industry experts and I would highly recommend attendance for future conferences. And, if your own personal development isn’t quite enough to tempt you, after the final closing remarks, you are served up with a delicious two course lunch and a chance to network and meet some of the experts.

Follow us on Twitter @AbchurchComms

LSE Chief advocates for SMEs

“There are 21.7 million people unemployed in Europe, and 23 million SMEs. If each SME were able to take on one more person…?This is why governments across Europe must look at all they can do to assist SME growth; these businesses are the essence of our future prosperity,” said Xavier Rolet, CEO of the London Stock Exchange last night at the AIM annual awards ceremony.

This year, the old Billingsgate Fish Market (built in 1874) hosted the event, which has arguably the best views of Tower Bridge in the city. Over 1,300 guests attended the dinner, comprising  AIM quoted companies, NOMADS, brokers, accountants, lawyers and public and investor relations firms, making it the largest AIM gathering in the City. Sponsors of the event ranged from Argus to Zeus. And the overall winner of evening, taking the Company of the Year Award was May Gurney.

Follow us on Twitter @AbchurchComms

LSE Aim Conference 2011

Mark Hoban MP and Marcus Stuttard, Head of AIM

The annual AIM conference, held at The London Stock Exchange, was an excellent opportunity for AIM-quoted companies to stay up to date on the latest developments and trends affecting the market, and to network with peers and key industry figures

This year Abchurch sponsored the event alongside PricewaterhouseCoopers, BlackRock and Religare Capital Markets and met a wide selection of AIM-quoted companies along with investors and members of the small cap community.

Raymond Greaves (Head of Research, Religare) kicked off his presentation by saying: “AIM is an excellent place to be as a growth company but…you must have a good story to tell and execute well and…you need good advisors.”

Our CEO Julian Bosdet guided the CEO and Finance Director delegates through Building Relationships To Attract Investors. The importance of a cohesive approach covering retails investors, Private Client Investment Managers (PCIMs) and institutional investors was picked up well by the audience. With institutions unlikely to take a position through buying from retail investors, PCIMs are a very effective way of packaging up shares currently in retail hands to sell on to larger buyers.

The conference kicked off with a welcome from David Snell, Partner at PwC, who also presented later in the day on ‘Securing AIM’s Future’. The welcome was followed by an introduction delivered by Xavier Rolet, the Chief Executive of the London Stock Exchange.

A keynote address delivered by Mark Hoban MP, Financial Secretary to the Treasury, praised the role AIM plays in supporting growing businesses and the UK economy. He said:

“Small and medium sized business enterprises play a vital role in our economy, providing both jobs and services throughout the UK and beyond. As a government, we are committed to supporting SME’s and have launched a range of initiatives including reform of EIS and VCT, funding for new Enterprise Zones and improving access to credit facilities for smaller companies. These and other projects are all designed to drive growth and innovation which will fuel the continued recovery of the UK economy.”

The afternoon session started with an AIM case study from Matthew Walls CEO of Epistem. This was a success story of AIM from the outset, with significant interest post-float, well-subscribed primary and secondary fund-raisings, and strong growth in share price despite the recent economic turmoil. Next to the stage was Madeleine Cordes of Capita Registrars discussing Corporate Governance for AIM Companies.

The day’s events were wrapped up with the final presentation provided by Ralph Cox, MD of the fund-manager BlackRock, where he went through the dos and don’ts when approaching fund managers; what he likes to see, and what will make him say “no thanks”.

These LSE events are always very educational and insightful for the audiences and it was brilliant to see a great turnout from AIM companies……we look forward to the next one!

Adam

Follow us on Twitter @AbchurchComms