February - April 2021 - Hybridan
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
We are small cap brokers and advisers, dedicated to fund raising, promoting investor awareness and providing market-driven corporate finance advice. We raise capital for companies in the most efficient manner possible and pride ourselves as being one of the few consistently profitable broking firms in the City. This has been achieved through a highly disciplined approach when seeking to create both corporate and institutional relationships. Coupled with our focus on our corporate clients, the quality of our institutional relationships is of paramount importance to us and is what sets us apart from our peers. These relationships have proven invaluable during the lockdown period and enabled us and our clients to continue to execute transactions. Our core investor base includes: ∙Institutional fund managers ∙VCT and EIS fund managers ∙Family Offices ∙High Net Worth Investors ∙Wealth Managers We communicate the investment cases of our clients to the market through equity research and frequent non-deal investor road shows. We provide market-driven corporate finance advice to our clients to help deliver shareholder value. Member of the Member of the LSE. CISI. Regulated by the FCA. Began trading in Member of the Expertise in January 2007. QCA. stocks quoted and listed on the, Held in high LSE, AIM and regard by Aquis Exchange. corporates and institutions. 2
Offering Corporate Equity Equity Sales Broking Research Private / Corporate Investor unlisted EIS Finance Access /VCT fundraisings The three R’s Research Roadshows Results The element most closely We believe that research within the remit of the To gain a new holder by a broker who has company itself. This companies may need spent years nurturing the applies to financials, or multiple meetings, over a trust of institutions milestones in the period of months or if not carries significant execution of the business years. credibility. plan as well as non- financial KPIs. The digestion of an in depth research note is We stress the importance We have shown that over often an investor’s first of delivering relevant and time smaller quoted step in the DD process, material news flow companies can build up followed up by regular between the bi-annual significant institutional updates so that news is statutory reporting dates holdings. viewed in a relevant that prevail. context. 3
Our work • A level of professionalism in handling investors and research normally found in a large institution, but our expertise is in the small cap arena. • No NOMAD, no wealth management and no market-making = no conflicts and no hidden profit centres with different agendas. • Corporate Broking is what we do best: our only interest is in looking after our Corporate customers, which also means looking after our investors. • Well connected, often presenting at events, CEO is Deputy Chairman on the QCA Board and Chairman of the Small Cap Awards. • We are constantly monitoring for developments both in our market and clients’ markets too, publishing our daily Small Cap Feast update which is sent to over a thousand investors and other market participants. • We are one team of people and are very accessible beyond normal working hours. Case Study 1: One Heritage Group (LON: OHG) UK Property Company IPO on Standard List 70 Since Appointment: 60 - Mentions in daily Small Cap Feast 1 Mkt cap: - Number of research notes 1 £14.3m 50 Initiation of 40 coverage IPO at 10p on research note Standard List, published 30 market cap £3m 20 Family Office market 10 purchases Mkt cap: £3m 0 23/12/2020 02/02/2021 4
Case Study 2: Symphony Environmental (LON:SYM) Profile raised, Family Office investors added 35 Since appointment (August 2019): Non-deal - Mentions in daily Small Cap Feast 17 roadshow 30 - Number of research notes 12 - Number of non-deal roadshows 4 25 20 Further Pre appointment Family Office investor meetings purchases 15 and Family Office purchases Mkt cap: £30m 10 Non-deal 5 roadshow Mkt cap: Non-deal £14m roadshow 0 22/11/2019 22/02/2020 22/05/2020 22/08/2020 22/11/2020 02/02/2021 Case Study 3: TMT Investments (LON:TMT) Introduced first institution and successfully raised profile Mkt cap: 9 $219m Since appointment: - Mentions in daily Small Cap Feast 25 8 - Number of research notes 28 - Number of non-deal roadshows 14 Non-deal roadshow 7 6 $1.2m block Placing $3.5m at trade $2.43, including 5 first institutional investor 4 Mkt cap: 3 $46m 2 $750,000 Non-deal block roadshow 1 Hybridan trade Appointment & non-deal roadshow 0 06 N November 2015 06 November 2017 06 November 2019 01/02/2021 5
Case Study 4: Sareum Holdings (LON:SAR) Attracted supportive shareholders over a 10+ year period 3 For this chart: Mkt cap: - Mentions in daily Small Cap Feast 57 £62m - Number of research notes 42 2.5 - Number of non-deal roadshows 12 Placing to 2 raise £1.02m at 0.6p Placing to Placing to raise £0.7m at 0.7p Placing to 1.5 raise £1.1m raise £0.78m at 0.7p at 0.4p 1 Mkt cap: 0.5 £6.7m 0 07 August 2015 07 August 2016 07 August 2017 07 August 2018 07 August 2019 07 August 2020 Case Study 5: Petards Group (LON: PEG) UK engineering company recovery play 18 Mkt cap: For this chart: £8.2m 16 - Mentions in daily Small Cap Feast 7 - Number of research notes 6 14 12 10 8 Mkt cap: 6 £8m Non-deal Hybridan Non-deal 4 roadshow roadshow introduced investor market purchases 2 0 03-Jan-20 03-Jul-20 03-Jan-21 6
Case Study 6: Rural Broadband Solutions (AQSE: RBBS) Aquis RTO to address countryside broadband needs 5 4.5 Mkt cap: RTO on Aquis, £14.4m 4 raising £2.5m 3.5 Initiation of coverage research note published 3 Offer Price 2.5p, Since Appointment: 2.5 market cap - Mentions in daily Small Cap Feast 2 £7.6m - Number of research notes 2 2 04/09/2020 04/12/2020 02/02/2021 Case Study 7: ADM Energy (LON: ADME) Energy investment company – connecting offshore Nigeria with UK small cap generalists 7 Mkt cap: £6.3m Hybridan 6 appointment 5 4 Placing to raise £0.67m Family Office 3 Initiation of at 5.5p market coverage research purchases note published 2 Mkt cap: Since Appointment: £2.1m 1 - Mentions in daily Small Cap Feast 5 - Number of research notes 5 0 01-Jun-20 01-Sep-20 01-Dec-20 01-Feb-21 7
Current Market Sentiment • UK small cap market sentiment remains buoyant in 2021, continuing the positive momentum of 2020, in which the AIM market rose 21% compared to a decline of 14% in the Main market, a massive 35% outperformance. • In a year dominated by bad news, AIM companies raised £5.3bn in 2020, the most since 2010. It is perhaps fitting that on the junior market’s 25th anniversary, it showed that when the chips were down and companies needed access to capital quickly and efficiently, the UK junior listed ecosystem of corporates, investors and advisers delivered resoundingly. • Indeed, the value of all trades on AIM in 2020 was £83bn, the most since 2007, while the total number of trades last year was 17.1m, equivalent to more than an eighth of all trades on the market in its entire lifetime. • Not only that, the AIM market finished 2020 at its highest ever total market capitalisation, of £131bn, up from £104bn in the previous year, even as the number of companies listed dropped to 819 from 863. While that’s the least number of listed companies since 2003, the average market capitalisation is over £160m, up from £66m a decade ago, showing the market is maturing with a trend to more established companies. • While IPO activity was subdued in 2020, with private companies reluctant to test the market in the face of the pandemic, activity started to pick up in Q4, with 10 IPOs on AIM in the final quarter of the year raising £192m compared to three in Q3 raising £76m. That compares to only 10 IPOs on AIM in the whole of 2019, so life is certainly coming back to this entrepreneurial SME market. • Momentum has carried on into the first quarter of 2021, with many predicting a bonanza year for IPOs. Among larger companies, Darktrace, Deliveroo and TransferWise are all working on listings, following Moonpig and Dr Martens which have recently listed. • In the smaller company space, consumer products business Supreme listed in the first week of February, with miner Cornish Metals and finance boutique Baskerville Capital (to be renamed Oberon Investments Group) expected to follow shortly. • Some recent small cap joiners that have already made a splash this year include bar operator Nightcap, up 85% since listing on AIM on January 13, and One Heritage Group, a property developer focusing on the north-west of England and a corporate client of Hybridan, which has quintupled in price since joining the Standard List on December 23rd 2020. 8
Outlook • With vaccines being rolled out globally, the US election in the rear-view mirror and Brexit having at least been passed in date terms, optimism in equity markets remains high with investors keen to look at transactions and hear new investment stories. • Our own deal pipeline remains strong, as it has throughout lockdown, both in the public and private spheres, including a mix of IPOs, secondary fundraises, reverse transactions and substantial vendor placings. • While there is of course a risk that any future shocks may dampen investors’ enthusiasm, our message to companies seeking to spread their investment case or raise capital is to strike while the iron is hot. • As long as there is a compelling reason for capital raising, such as adding to revenue- generating teams or making accretive acquisitions, or a management team wishes to update investors on their equity story that has perhaps been overlooked and consequently mispriced, investors will be willing to listen. • While sectors like healthcare and technology remain in focus, companies in all sectors have a good opportunity currently to pitch the investment community, as long as a credible story for future growth is in place. • As the world slowly emerges from the darkness of the pandemic, pent up demand for goods, services, and natural resources should enable those companies who have navigated 2020 successfully to emerge stronger than before and deliver strong returns to shareholders who have supported them through a challenging period. • We continue to urge small cap management teams to: • Stay flexible when it comes to pricing new equity issuance, or if the discount needed to raise the required amount is too deep, consider other forms of financing including convertible loans. • Continue in the quest to introduce your story to new investors, as it is a worthwhile exercise to ensure it is on the radars of new potential investors, and some may even buy in the market. If cash is king, liquidity is queen – investors need liquidity more than ever and companies will only increase liquidity by being proactive with investors when they do not expressly require new funds. • Ensure all possible pools of capital are approached, both professional and retail, in the latter case potentially utilising one of several platforms that specifically exist to service this audience. • Make sure any available tax efficient structures such as Enterprise Investment Scheme and Venture Capital Trust eligibility is obtained, given that this is one area of the market that is certainly still investing. 9
10
CEO & Managing Partner, Corporate Finance Claire Louise Noyce T: +44 (0)20 3764 2341 E: claire.noyce@hybridan.com HYBRIDAN LLP Director, Corporate Finance E: enquiries@hybridan.com W: www.hybridan.com John Beresford-Peirse T: +44 (0)20 3907 0334 Follow us on Twitter @hybridanllp E: john.bp@hybridan.com Follow us on Linkedin Director, Head of Corporate Broking & Sales Niall Pearson T: +44 (0)20 3764 2343 E: niall.pearson@hybridan.com Director, Head of Research Derren Nathan T: +44 (0)20 3764 2344 E: derren.nathan@hybridan.com www.hybridan.com 11
You can also read