Dealogic performs well financially, but AIM listing does not offer investors meaningful liquidity or marketability
Dealogic PLC announced yesterday that it is seeking shareholder approval for the cancellation of admission to trading of its ordinary shares on AIM. The reasons Dealogic – which has a market capitalisation of around £150 million and is itself an equity capital markets specialist – gives for leaving the junior market are a good summary of why even successful companies can find that an AIM listing brings few advantages but increased costs:
- The listing provided only limited liquidity for dealing in the company’s shares - during the last 12 months, trading has occurred on only 131 days out of a possible 252 trading days.
- Dealogic’s cash and borrowing capacity mean it is unlikely to need to raise cash for an acquisition by means of an equity issue, or to use its shares as an acquisition currency.
- The lack of correlation between the company’s share price and its operating performance “is reducing the overall effectiveness of the Company’s employee share incentive plan”.
- The ongoing costs and regulatory requirements of maintaining an AIM listing are “not a justifiable expense”.
Dealogic’s announcement can be read here.
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