SMALL CAP MOVERS: Is this the tip of the funding logjam?

Are we starting to see a break in the small-cap funding logjam of the past two years? Possibly. But don’t expect it to be a long-lived phenomenon.

Since the start of May, growth companies have raised around £270 million in new investment.

Now that may not sound a huge amount, but it represents an uptick when you realise that a total of £228 million was raised in IPOs and follow-on funding in the first quarter.

This market renaissance is expected to be short-lived with pent-up supply bursting through ahead of the General Election.

Since the start of May, growth companies have raised around £270 million in new investment.

Since the start of May, growth companies have raised around £270 million in new investment.

The prevailing opinion in the Square Mile is the taps will be turned off after the vote and as London heads into the dog days of summer.

And don’t think the past six weeks have been a period of unalloyed joy.

Companies have been forced to take steep discounts to complete some chunky fundraisers with investors asked to endure significant dilution – much as retail platforms such as REX and Primary Bid have tried to mitigate the latter issue.

For those not lucky enough to refill the coffers it has been tough going – and for some it is already too late.

Active Energy Group (down 63 per cent) said it intends to cancel its listing on AIM and enter a voluntary liquidation process after receiving no acceptable offers for its CoalSwitch business.

R&Q Insurance (off 97 per cent) is following a similar path, while metallurgical coal mine owner Bens Creek pulled the pin two weeks ago.

Turning to the wider market, the AIM All-Share was in something of an early summer holding pattern as it lost 2.35 points, or 0.3 per cent to trade at 774.75 on Friday.

It underperformed its benchmark, the FTSE 100, which rose 1.3 per cent to 8,252.07, albeit on modest volumes.

How does a polling company fail to deliver during a general election? Well, that’s a question investors in YouGov will be asking after the group sounded the earnings alert on Thursday, leading to a 45 per cent crash in the company’s market value.

‘Casual observers of YouGov might assume the company would enjoy a bumper time during the election but its polling operation makes a relatively modest contribution to group revenue,’ said Russ Mould of the funds platform AJ Bell.

‘The data analytics side is more important and this is where the company is struggling. The company invested for an expected acceleration of growth in the second half of its financial year which, in classic fashion, failed to materialise.’

The fun and games continue at Kibo Energy (down 37 per cent). This week it unveiled a simplified restructuring plan that involves raising £340,000 at 0.01p a share and the appointment of major shareholder Clive Roberts to the board.

It supersedes a previous blueprint which involved raising £500,000 and bringing natural resources veteran James Parsons as a non-exec.

Up 172 per cent and the week’s big winner is Longboat Energy which is to switch its focus to Southeast Asia after selling its stake in its Norwegian oil and gas joint venture, netting around £2 million in the process.

It signed off by saying that exploration in Norway favours “an increasingly small group of very large companies”.

Ringing the changes in the boardroom of Cap-XX, the supercapacitor specialist, certainly had the desired effect on the shares, which more than doubled.

Among a raft of non-executive appointments made was that of Dr Graham Cooley who transformed ITM Power from microcap to hydrogen power storage unicorn (although ITM has since given up some of those stellar gains).

Bradda Head Lithium (up 41 per cent) enjoyed a decent run in the wake of a promising set of drilling results from its Basin Project in Nevada, which it’s confident will trigger a £2.4million payment from its partner Lithium Royalty.

Finally, Alpha FMC, one of AIM’s larger constituents, looks set to bow out after its board gave its blessing to a £626 million bid from private equity group Bridgepoint.

Ken Fry, chairman of the fund management consultancy business, said the offer ‘recognises the quality and value of the business and represents an opportunity for Alpha FMC shareholders to realise their entire investment’.

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