It seems that SIX, Switzerland’s principal stock exchange, is not messing around following last week’s announcement that it was to buy Aquis [AQSE:AQX], the company that runs the stock exchange that takes its name. The UK challenger stock exchange’s chairman, Glenn Collinson, announced earlier this week he’s stepping down from his position with immediate effect.
Although the press release says Collinson, who is also a director, is leaving the exchange for personal reasons, it seems that changes are afoot at the stock exchange. SIX is starting to make moves to capitalise on its GBP194m investment. The offer, at 727p/share was a 120% premium on the closing price on 9th November.
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As previously reported this week, Aquis and Cboe Europe are planning to form a joint venture which will explore a bid to perform the role of the EU’s equity consolidated tape (CT) provider. Aquis and Cboe between them collectively process over half of the daily European equity trades. They plan to establish and co-own a new company named SimpliCT (pronounced: simplicity), which will be based in the Netherlands and seek to leverage the expertise of its founders to develop a best-of-breed equity CT.
Strong and steady hand at the tiller
Collinson will be replaced by independent non-executive director, Deirdre Somers, who is promoted to non-executive chair, and will continue to be responsible for audit, risk and compliance, and nominations and remuneration. Sommers was previously chief executive of the Irish Stock Exchange. She was in charge during the ISE’s sale to Euronext in 2018, so may well be the best available resource to officiate the marriage between SIX and Aquis, and in the interregnum period, a strong, experienced hand at the tiller is what is going to be needed.
Collinson said: “It has been a pleasure working with the Aquis team and seeing the successful development of the business, culminating in the announcement of the SIX offer, which is an excellent outcome for Aquis and its shareholders. I’m confident that Aquis will continue to go from strength to strength.”
He will be leaving Aquis to explore other interests in the technology sector, and the SIX takeover has created the break for him to exit the business and seek new ventures. The exchange took pains to point out that: “[…] Mr Collinson remains fully supportive of the SIX offer and continues to believe that its terms are fair and reasonable. Mr Collinson’s irrevocable undertaking in relation to the SIX offer remains in full force and effect.”
Clear rationale for a merger between SIX and Aquis
The merger between SIX and Aquis makes sense in the big picture. Scale is king in global exchanges, with the bigger markets, primarily the North American ones, Nasdaq and NYSE, hoovering up global business due to their massive liquidity and global reach. Even the LSE/FTSE has been suffering from draw to the North American giants.
Aquis has done a stunning job of attracting a plethora of growth-orientated companies over the past five-years, as a result of its accessibility, simplicity and efficiency. But despite its plucky outsider status, it could never go toe-to-toe with the big boys. With the financial muscle of SIX, and its CHF1.6 trillion (GBP1.4 trillion) of assets, in its corner, it can level-up and compete on a more equal basis.
SIX has had its eye on Aquis and London for a while. Its partnership with Aquis is a compelling strategic opportunity for the Swiss exchange, giving it a bridgehead in the City, still Europe’s premier financial market, and expansion beyond its home markets.
AIM must be nervously glancing in the rear-view mirror. Although Aquis has landed a few blows it was fighting an uphill battle. With its new backing Aquis might seriously become the UK’s premier smaller company market in the next decade. That said Aquis is itself listed on AIM itself under the ticker, LON:AQX.
The big issue (for both AIM and Aquis) has been the sustained downturn in the UK equity market since 2022. Aquis has only seen two new IPOs in 2024. AIM has lost more than 90 listings this year, with AIM having its lowest membership for 23-years, at 695 firms. The picture is similar for the UK’s bigger exchange.
Paying a premium now for future value
However, with SIX coming onside, one would think that the short-term wobbles can at least be mitigated. Swiss bankers are not known for their ebullience or venturousness, but the premium the Swiss Exchange has stumped-up for Aquis means that it sees a huge amount of value in the UK smallcap and midcap arena. Moreover, with SIX’s existing European network the Swiss can direct investment from the Continent to the UK.
Aquis opened the week trading at 710p, up 105.8% over one-year and up 89.3% year-to-date.
Somers, alongside day-to-day key man, chief executive, Alasdair Haynes have a busy but exciting time ahead of them. They must be hoping that with all the big elections behind, and a promise of more stable waters, that Aquis, with SIX’s backing, can really start to shine in the next few years.
Somers said: “I am delighted to succeed Glenn [Collinson] as chair of Aquis, at an exciting moment for the business following the announcement of the proposed combination with SIX. I look forward to working with Alasdair [Haynes] and the board to progress the transaction which presents a compelling opportunity to accelerate the development of our business on the European stage.”
