Belize Finance, the investment company owned by Lord Ashcroft, is pushing to delist Gusbourne, the UK wine maker, from AIM. Belize Finance currently owns 66% of the issued share capital of Gusbourne LON:GUS.
The plan is to reconstitute Gusbourne as a private company. However, under AIM rules, the company cannot delist without approval of 75% of the shareholders in the company. Gusbourne is calling a general meeting of shareholders for 7 March, and if the vote passes, the company will delist effective 19 March.
Gusbourne’s board of directors cited the “considerable cost and management time and the legal and regulatory burden associated with maintaining the company’s admission to trading on AIM” as the primary reason to delist.
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AIM listing now considered too expensive
The management view is that the costs of maintaining an AIM listing are disproportionate to the benefits of Gusbourne’s continued presence on the exchange. Gusbourne estimated that the recurring administrative and adviser costs would be cheaper by at least £250,000 per annum if the company went private, and that it would represent “a significant reduction in overhead cost burden.”
The directors also cited a lack of liquidity in the AIM market coupled with a high level of volatility in the share price, associated with that lack of liquidity. This, they argued, was having a knock on effect on Gusbourne’s position the wine industry and its image with important customers. It raises an interesting argument in terms of whether a company’s share price can influence its wider brand within its sector, especially for smaller companies.
Gusbourne’s board even went as far as to argue that the share price was impacting staff morale and, importantly, its ability to secure further financing. For existing shareholders, the company said it would provide the ability to sell their stock via an auction-based secondary market facility, in this case JP Jenkins.
What’s gone wrong with AIM?
Gusbourne becomes the lastest in a line of small caps in the UK which have made the decision to delist from AIM. Many companies are citing similar reasons behind the decision to go private and rely on secondary market trading facilities for further liquidity in the stock. Brokers The Armchair Trader has spoken to in the last few months have said their is a marked lack of liquidity in AIM stocks as a consequence of less risk tolerance on the part of private investors, and fears of the government’s new posture on capital gains tax.
Other factors also play a role, including the high returns many investors have enjoyed from highly liquid US tech stocks in the past two years, and the rewards offered in the crypto market.
Gusbourne is a highly regarded UK wine maker
Almost 100 companies chose to leave AIM in 2024, taking the market to its lowest level in terms of total listings since 2001. Tax firms have been warning that worries about further taxes from the Labour government this year are also undermining confidence in the AIM market. A large quantity of AIM stocks – by some estimates as much as 15% of the total – are held by funds that are primarily used to tax relief.
Gusbourne is one of the most highly regarded wine makers in the UK and has 60 hectares under vines in Kent with a further 30 hectares at the Goodwood Estate in Sussex. Its first vintages including a 2006 Brut Reserve and a Blanc de Blancs were launched to critical acclaim in 2010.
