The funding wells have all but dried up for British plcs, right?
Maybe not, judging by some of the top stories emerging from the AIM junior market this week.
Take Rosslyn Data Technologies PLC (AIM:RDT), which on Thursday launched a £3.3 million equity round via a share placing and convertible loan notes.
The twist? At 0.5p a pop, the placing represented a nil discount on Wednesday’s closing price.
AIM-listed Rosslyn shares spiked 20% higher, from 0.45p to 0.54p, on the funding news, though have since reverted back to 0.51p.
ImmuPharma PLC (AIM:IMM, OTC:IMMPF) also looked to the markets this week, having raised £1.35 million through an equity round that the biotechnology firm said will give it a cash runway until at least the end of 2024.
In fairness, the 2p asking price for ImmuPharma stock represented a 16.7% discount to the closing price.
Some may call this a ‘keeping the lights on’ kind of deal, others may concede that raising cash in 2023 comes with a few caveats.
Besides, ImmuPharma’s fundraise was far from the most heavily discounted in recent months. Another biotech, Aptamer, took a 79% discount offer in July.
Solar-technology micro-cap Verditek PLC (AIM:VDTK) was smashed 27% lower on Friday after announcing plans to raise £500,000.
The catch? At 0.45p per share, the offer marked a 40% discount to Thursday’s closing price.
Clearly, investors have a threshold for tolerance when it comes to fundraising discounts. At least Verditek can keep its presumably solar-powered lights on for now.
Back to the premiums, Instem PLC (AIM:INS) agreed to a £203 million takeover offer from healthcare-focused private equity group Archimed on Wednesday.
The deal would see shareholders of the AIM-listed company receive 833p per share of cash, which was a 41% premium to Tuesday's closing price and 34% to the average price over the past six months.
Shares popped 39% higher to 825p in response.
AIM underperforms against FTSE 100
UK equities as a whole had a strong start to the short week, with London’s lead index up 1.3%, the FTSE 250 up 1.5% and AIM up 0.7% when the markets opened on Tuesday.
Stimulus measures taken in China and a positive reaction to Federal Reserve chair Jerome Powell’s speech at the Jackson Hole summit gave equities some momentum. Closer to home, a fall in shop price inflation in the UK added a spring to the market’s step.
The junior market was unable to keep pace with the upper echelons as the four-day trading session progressed, ending 0.7% higher from last Friday’s close against the FTSE 100’s 2% gain.
All in all, a net positive for the London stock market, despite a few notable dips.
Ovoca, Pelatro and Sondrel in the hot seat
Ovoca Bio (AIM:OVB) plc felt the market’s wrath as shares crumbled more than 80% on Thursday morning.
The clinical-stage biopharmaceutical company has been conducting a phase II dose-ranging study assessing Orenetide for hypoactive sexual desire disorder in women.
Unfortunately, Ovoca did not find any statistically significant superiority of Orenetide for the condition compared to a placebo used in the study, causing investors to jump ship.
Marketing software company Pelatro PLC (AIM:PTRO) was also on the chopping block after announcing that it would delist from AIM.
Directors reviewed the pros and cons of retaining the company's AIM trading admission and, considering trading valuation, rising costs, fundraising challenges in London and capital shortfalls, have recommended a cancellation for shareholders' best interests.
Shares were sent down 70% on the announcement.
One of the UK’s few listed chipmaking firms Sondrel (Holdings) plc also plummeted this week after disclosing a trio of project delays for its bespoke application-specific integrated circuit (ASIC) designs.
Three of Sondrel’s ASICs customers have pushed their deliveries back between six to 12 months, citing increasing inflation and decreasing end-market demand for Sondrel’s technology.
Shares fell 60% as a result.
Totally plc – whose chairman Bob Holt recently evicted himself from the top spot at troubled makeup group Revolution Beauty – sounded the warning siren on the company’s NHS contracts.
Speaking at an AGM, Holt stated: "We continue to work within a challenging operating environment alongside the NHS in crisis. The cost of agency staff required to deliver safe services for patients exceeds our anticipated forecasts and many decisions related to the awarding of new contracts are currently on hold.”
Accordingly, “we are actively implementing strategies to streamline our operations and to align them with a smaller overhead base which more readily reflects the current contract requirement”.
With the sound of P45s being printed out, shares were sent 15% lower to 9.05p.