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MSBs Accessing Capital Markets

 

Bod Buckby

Head of UK Primary Markets – North

London Stock Exchange

· Leader Interviews,Finance

“MSBs’ challenges are around trying to define a strategy that has clear, long-term growth and will be attractive to the market.”

The primary way we help mid size businesses (MSBs) is through providing access to capital. Whether you’re looking to invest in new technology, attract the right people, export or grow overseas, it all needs money to make it happen. That’s what we do at the London Stock Exchange.

Every year, billions of pounds are invested through London. Investors are looking for fast-growing MSBs that will be the next big companies of tomorrow. It’s our role to help companies find their voice and get their story out to the market, while at the same time finding the investors for those companies.

AIM has been incredibly successful as a growth market. In Q3 2018, over 80% of all the capital raised through European growth markets was through AIM. This is what it was set up to do: to help high-growth businesses.

Investors and risk

AIM is designed to give a more flexible approach to regulation and governance. We are conscious that, by running a growth market, we are dealing with dynamic companies. They don’t necessarily have the infrastructure of a FTSE 100 company and shouldn’t be bogged down with over-governance, so we provide the conditions for investing in those sorts of companies.

What are MSBs’ challenges when raising capital?

These are not just businesses that are dependent on current market conditions. MSBs’ challenges are around trying to define a strategy that has clear, long-term growth and will be attractive to the market. The ones that are successful are generating recurring revenues and are building value for the long term.

For example, AJ Bell, a financial services company based in the North West, has recently had a successful IPO because they have a very good reason to invest: a customer-orientated platform that they have built and that is highly attractive to the public market because it can be scaled up easily.

Which companies are most attractive?

Investors are generally realistic about growth rates (we don’t all expect to see the next Facebook or Amazon), but they are looking for businesses that are ambitious and can likely scale internationally – companies with huge penetration in the UK that are well placed to deliver products and services overseas.

“It’s our role to help companies find their voice and get their story out to the market, while at the same time finding the investors for those companies.”

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