Closing 2015 the small cap markets took a keen interest in shell companies predominantly listed on AIM, I believe this has been born out of change.
During the year the regulators have looked closely at tightening up on small independent investment vehicles or shell businesses, this I believe is due to the number of micro-cap business’s failing to yield a single penny of profit for everyday punters.
As a result of the ongoing changes to the junior markets it has become clear that a minimum of £3m is need to secure the listing of a shell / investment company which has put positive pressure on the existing companies in circulation.
Private investors are easily recruited by engaging thoughts of ‘what will be’ when in reality the expectation of securing well-heeled business men to the board or the acquisition of an exciting technology asset seems enough to have punters frothing at the mouth.
It makes perfect sense for speculative investors to look at the potential of a market correction of shell companies based on a declining number of vehicles available. Offset that against a supply glut in poorly furnished resource companies and we again can see the clear appeal, however investment vehicles and shell companies are not without risk.
To caveat further paragraphs one must be completely clear on the risk of failure to fulfill some investment criteria. If your company’s board do not secure or act in a relatively short period they risk burning the cash balance on director pay or due diligence, worse they may well drag a deal on too long causing the company to fail to satisfy the exchanges criteria thus end up suspended pending further clarification of the company’s position.
Investors must be aware of the positives or potentially negative trap doors which can magnify or minimize a company’s share price.
Blenheim Natural Resources (BNR) Have caught the markets attention after raising funds and enrolling the services of Chris Cleverly to the board as a non-executive director, African Potash has caused big waves of excitement and whilst little is known of Blenheim (a dog – of small red and white breed of spaniel) let’s hope the company reflects the same work rate as the animal its potentially named after as punters look to back another Cleverly winner.
Onzima Ventures (ONZ) Raised £750,000 after cleaning up UTN, the remains of a failed business were rescued by venture capitalists with a new outlook, the shell was cleaned up leaving Onzima with a strong cash to market cap balance. Having announced their first dip into the market with a £50,000 investment it has become clear that the company’s intention is to invest in companies with a significant valuation uplift which (if needed) will be financed on sensible equity debt structures. Financial tech or Bio tech has been the focus of many in the markets, currently Onzima looks to be significantly undervalued against other popular (peers) shell companies.
Glenwick (GWIK.L) Formerly Treveria become available after cash was returned to shareholders, EUR20m was returned leaving a clean cash vehicle to move into a new environment. The story has been engaged by the speculation the company are following a CEB resource blue print, other than the most recent RNS stating that the company has secured additional funds (0.15p) to undertake pre-completion work of its strategy which should further news announced in the short-term according to the most recent RNS.
Article written by Frederick Dibnah
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