Report
Mark Thomas ...
  • Martin Hall
  • Mike Foster
  • Milan Radia
  • Paul Singer
  • Paul Mylchreest
  • Tony Williams
  • Yingheng Chen

The Monthly: May 2020

Feature article - Are the public markets closing to smaller companies?

There has been much comment on the fact that equity markets in the US and Europe have been shrinking for some years now. This paper assesses the evidence in London, considers explanations, asks whether it matters and (assuming it does) what can be done.

We find that, excluding the 350 largest companies and all financials the number of trading companies on the Main Market has fallen by 72% since 1999. The average market cap at IPO has gone up substantially; for example, the average AIM IPO market cap has grown from £21m in 1995 to £127m in 2019, even when adjusted for inflation.

Companies leave it later in their life to IPO. This is bad for them, the economy and society. We suggest a number of solutions.
Underlyings
Advanced Oncotherapy

Advanced Oncotherapy is focused on providing radiotherapy systems for cancer treatment through the use of a proton therapy technology. Co. operates in two business segments: proton therapy and healthcare related properties. The healthcare related property U.K. segment relates to Co.'s property in Folkestone, which is being marketed for sale.

Allergy Therapeutics PLC

Allergy Therapeutics is a pharmaceutical group focused on allergy vaccination. Co. mainly sell its products in European countries and its pipeline of products in clinical development includes vaccines for grass, tree and house dust mite, as well as a peanut allergy vaccine in preclinical development. Co. sells a range of aluminium-free allergy vaccines and diagnostics. Co. sells both injectable and sublingual (oral) formats. The commonly prescribed are those for the treatment of pollen related allergies, particularly for allergies to grasses, weeds and trees. Co.'s vaccines trade under various brand names depending on the market, e.g. Pollinex Quattro, Polligoid and TA Graser Top.

Arbuthnot Banking Group

Arbuthnot Banking Group is primarily involved in banking and financial services. Co. is organized into three main operating segments: Retail banking (associate), which incorporates household cash management, personal lending and banking and insurance services; U.K. Private banking, which incorporates private banking, commercial banking and wealth management; and Group Centre, which is comprised in Co.'s Group Centre management. As of Dec 31 2016, Co.'s total assets were £1.27 billion.

Diurnal Group

Diurnal Group is a pharma company developing products for the life-long treatment of chronic endocrine conditions. Co. is focused on addressing clinical and patient needs in hormone replacement, initially by developing and marketing products for the rare orphan diseases congenital adrenal hyperplasia and adrenal insufficiency. Co.'s products include Infacort®, an immediate-release hydrocortisone preparation targeting Adrenal Insufficiency (including Congenital Adrenal Hyperplasia) in children under six years of age in Europe and 16 years of age in the U.S.; and Chronocort®, a modified-release hydrocortisone preparation, initially targeting Congenital Adrenal Hyperplasia in adult patients.

Genedrive

Genedrive is a holding company. Through its subsidiaries, Co. is a molecular diagnostics business developing and commercializing a point of care diagnostics platform for the diagnosis of infectious diseases and for use in patient stratification (genotyping), pathogen detection and other indications. Co.'s Genedrive® is a patented small polymerase chain reaction platform which enables rapid nucleic acid amplification and detection from various sample types, including plasma, sputum and buccal swabs. Co. also provides contract research services to drug development companies under the Epistem brand name.

Haydale Graphene Industries

Haydale Graphene Industrials uses materials, including graphene and silicon carbide (SiC), to enhance the quality and performance of its customers' products. In the U.S., Co. manufactures proprietary silicon carbide fibres and whiskers that strengthen ceramics and enable scratch and wear resistant coatings. Applications for SiC include scratch resistant cookware, corrosion barriers for oil and gas pipelines and cutting tools, for example, jet engine turbine blades from solid billets. Co. has developed proprietary graphene-based inks and coatings for the print and biomedical sensor markets, as well as enhanced resins for the pre-preg carbon fibre market.

Non-Standard Finance

Non-Standard Finance is a holding company. Through its subsidiaries, Co. is engaged in the provision and servicing of secured and unsecured personal instalment loans.

Pantheon Resources

Pantheon Resources is engaged in the investment in oil and gas exploration and development. Co. operates in the U.K. through its parent undertaking and in the U.S. through subsidiary companies. Co. operates in two reportable segments: USA and Head Office. Non-current assets, income and operating liabilities are attributable to the USA, whilst most of the corporate administration is conducted through Head Office. As of June 30 2017, Co. held 58% working interest in the VOBM#1 & VOBM#2H wells in Polk County. Co. also held 75% working interest in VOBM#4 in Tyler County.

Primary Health Properties PLC

Primary Health Properties is a holding company and a real estate investment trust. The principal activity of Co. is investment in primary healthcare property in the U.K. and Ireland. Co.'s properties are leased principally to general practitioners, government healthcare organizations and other associated healthcare users.

R.E.A. Holdings PLC

R.E.A. Holdings is principally engaged in the cultivation of oil palms in the province of East Kalimantan in Indonesia and in the production and sale of crude palm oil and crude palm kernel oil. Ancillary to these activities, Co. generates renewable energy from its methane capture plants to provide power for its own operations and also for sale to local villages via the Indonesian state electricity company. As of Dec 31 2016, Co. held interests in respect of two stone deposits and two coal mining concessions, all of which were located in East Kalimantan in Indonesia.

Surface Transforms PLC

Surface Transforms is a developer and manufacturer of carbon ceramic products for the brakes market. Co. is engaged in the design, manufacture and sell carbon fiber components. Co.'s products in the automotive industry are lightweight, durable and refined, providing heat dissipation and material strength. In the aerospace industry, Co.'s products provideweight reduction, improved brake performance and wear life. Co's research activities are concentrated on the ongoing identification of new products and applications for carbon fibre reinforced ceramic friction and non-friction materials.

Tissue Regenix Group

Tissue Regenix Group is a medical technology company. Co. is engaged in the development of regenerative products to create replacement native tissue using biological (human and animal) materials. With its platform technology dCELL®, Co. is focusing on the treatment of patients with wound care, orthopaedic and cardiac applications. The dCELL® technology allows Co. to process both human and animal tissues, removing DNA and cellular material but leaving intact an acellular matrix within which the patient's own cells can repopulate and regenerate, creating like for like tissue.

Volta Finance (GBP)

Volta Finance is a closed-ended investment company with the objective of investing, among other asset types, in the following main asset classes: Collateralized Loan Obligation, Synthetic Corporate Credit, Cash Corporate Credit and ABS. Co. has appointed AXA Investment Managers Paris S.A., as its Alternative Investment Fund Manager to manage the investments of Co.

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Analysts
Mark Thomas

Martin Hall

Mike Foster

Milan Radia

Paul Singer

Paul Mylchreest

Tony Williams

Yingheng Chen

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