New share placings represent the issue of more shares by listed companies that want to raise new capital. For investors in AIM companies, they represent the opportunity to pick up more stock in successful, fast growth businesses, frequently at a big discount to the listed market value. Sadly, however, much of these new allocations end up in the hands of institutional investors, even though approximately 60% of the shareholder base for AIM companies is comprised of private investors.
Some solutions are now available to investors who want to beat the pros to the punch, and pick up AIM stock placings before they go live on the exchange. PrimaryBid, which launched in March last year, has been positioning itself as a technology-driven service than can help investors get access to new AIM placings using crowdfunding technologies.
PrimaryBid generally informs clients of new placings on a Friday evening, and gives them about 48 hours to subscribe to stock, depending on how fast the take up is. Sometimes placings can be filled more quickly. It has several different transaction models, and the team at PrimaryBid works with brokers to help them to get new placings out to private investors.
As an example, PrimaryBid helped Sound Energy (SOU:AIM) with a fully underwritten transaction that was available for just one day. It was oversubscribed, resulting in the company raising £26.9m, 12% over the underwritten amount of £24.1m.
Investors can subscribe for new offers using a mobile app. PrimaryBid is free to join – the company still needs to carry out the usual know your client verification before it will allow investors to start buying stock, but once you are set up, you can set watch lists for AIM companies. However, PrimaryBid will alert users once there is a new placement in the offing. It is important to be reachable during the weekend, as most of the action seems to occur between Friday evening and Sunday evening. Once the market is opening on Monday morning, you are usually too late.
Dave Mutton, COO at PrimaryBid, says the company has raised money for over 20 placings since March last year, with private investors committing more than £16m in 2016 alone:
“We tend to allocate on a first come, first served basis,” he explains. “This gives our clients a sense of real surety – when it is gone, it is gone.”
The minimum investment is £1000 and PrimaryBid charges no commission, although investors will typically be paying some form of transfer fee to a custodial account at their broker, usually in the region of £20.
“Once a client is registered, they can put a bid on any AIM company,” says Mutton. “Occasionally we get very large bidders, so we can approach the company ourselves as part of a reverse enquiry process.”
PrimaryBid is still picking up speed – only last week it launched its first offering for a company listed on the main market, Toople (TOOP.L). PrimaryBid was offering it as 2p per ordinary share, which represented a discount of approximately 38% to the closing mid price on 2nd June. The average discount to the market on PrimaryBid has been 21% over the last few months. Other companies offering shares on PrimaryBid this year have included Ascent Resources (ASL), Versarien (VRS) and Premier African Minerals (PREM).