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Small Cap movers: ServicePower soars after takeover; CloudTag also reaches for the skies

Published: 04:00 10 Dec 2016 EST

Workplace software

Workplace software specialist ServicePower Technologies Plc (LON:SVR) looks set to exit AIM after agreeing to be taken over by an American private equity company called Diversis Capital.

It is a decent deal. Diversis is paying 6p a share, or £13.6mln, which is more than double the price of the stock before bid speculation surfaced.

It’s not quite the 8p peak it hit 2014, but not bad given the share price had been as low as 2.25p earlier this year.

With the pound on its backside, bids from cashed-up foreign buyers such as Diversis are set become more commonplace, one suspects.

And ServicePower’s take-out looks to be part of wider trend on AIM, which passed an unwanted landmark in October when the number of companies listed there dipped below 1,000.

That’s the first time this has happened since November 2004. At its peak in December 2007 the junior market was host to 1,694 growing businesses.

The fall-out from the crash of the natural resources sector has taken its toll.

At the same time, AIM is now deemed an expensive way to gain stock market exposure.

Remember, it was set up in June 1995 as a lightly regulated method of accessing capital; an alternative to a full listing.

According to bosses Proactive has spoken to, the oversight from advisers employed to police companies’ conduct on AIM can be suffocating, while the starting price for a listing is £500,000. 

For a small business that is a lot of cash; a good chunk of profits if you are making them. 

“We needed to be valued at over £30mln to be viable on AIM; the costs are phenomenal,” said Joe McTaggart, boss of the property firm Walls & Futures.

He opted from the lighter-touch ISDX share market to list his £3.3mln real estate investment trust. “It was a fraction of the cost,” McTaggart said.

Shares on the junior market had a fairly lacklustre week on thin volumes as the AIM All Share rose 0.6%, underperforming the FTSE 100, which was up 3.2%.

CloudTag Inc (LON:CTAG) reached for the skies this week, with the share price more than doubling after it confirmed speculation swirling on social media that its first wearable fitness device will be delivered later this month. 

With the Syria conflict apparently headed for a denouement, shares in Gulfsands Petroleum plc (LON:GPX), which part-owns a gas production facility in the country, soared 111%. In the last month they have tripled in value.

Investors in West African Minerals Corporation (LON:WAFM) - up 25% - meanwhile, appear to have bought into the iron ore rally just as its price hit reverse gear.

Elsewhere, it has been a busy and transformational week for Amryt Pharma PLC (LON:AMYT) - up 29% in the last five days.

Last Friday it surprised the market by landing a £17mln loan facility on very good terms from the European Investment Bank.

Those funds will be used to bankroll the late-stage development of a drug for a rare and painful skin disorder.

Then on Monday it licensed in its first commercial product.

In fact in 18 months it has managed two acquisitions, listings on the London and Dublin exchanges and raised a total of £35mln.

Chaired by Harry Stafford, one of the founders of Shire, it is following an identical model to FTSE 100 drugs behemoth.

It is specialising in treatments for rare, orphan diseases where time-line to market is truncated, the patient group small but the returns still incredibly lucrative.  

It was a tough week for RedT Energy PLC (LON:RED), but one that will solidify its financial position. For the energy storage specialist on Thursday said it had conditionally agreed to raise £12mln.

The news of share placing knocked 34% off the value of the business over the week. That said, investors who bought at the start of the year are still sitting on a 7% profit.

Finally, watch out for RM Secured Direct Lending. The shares start trading on Wednesday at £1 and there has been a big demand from the institutions – 25 in total, who have piled into the lender.

The company specialises in funding mid-sized firms needing £10-£15mln – a market that has been vacated by the high street and investment banks.

The institutions, mainly income funds, seem to like RM’s pledge to pay a dividend yield of 6.5%, which is far better than the best building society rate.

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