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Standard Listed AIQ announces placing, open offer and return from suspension. Who wins?

By Nigel Somerville | Wednesday 11 April 2018


Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.


In one of the most bizarre listings the UKLA has allowed through, AIQ (AIQ) got onto the Standard List in January, only to be suspended three days later. The shares had gone mad, rising to 125p at suspension despite being a simple cash shell having raised money at just 8p. It seems that there were buyers but nobody could sell as their shares were paper certificates which had not arrived. But there were a few other matters too.

There were Red Flags all over the place: the list of directorships was obviously incomplete (despite assurances that this IPO has been handled very professionally) and a wander through Google showed the linking of AIQ with businesses out east which were somewhat questionable.

Those links were taken down and the links denied (apparently they had been put up by someone else), and internet speculation that a deal was in the bag for AIQ proved wide of the mark too. But the directorships were admitted and have now been corrected.

Naturally, perhaps through gritted teeth, I accept the explanations, despite the possibility that some of those buyers may have originated from beyond these shores, based on (wrong) information.

Indeed, while the wrong information has been taken down, I wonder why it had not been addressed before the IPO.

Today we are told that there is to be a placing and open offer at 20p. The placing is for 575,000 new shares, with discussions underway, the idea being that this new stock when combined with existing stock which has now been dematerialised will allow an orderly market to be established.

We are told that:

It is expected that once the Suspension has been lifted, and enough time has elapsed to allow all outstanding trades to settle, the Company intends to make an Open Offer for up to approximately £250,000 at the Placing Price.

That should ease liquidity further, but it is hard to see investors queueing at the door for stock at 20p when most of the cash raised was at just 8p for a cash shell. However, it does mean that if the shares do not collapse back to 8p then existing shareholders can get in on the same terms as the placees so that seems fair enough.

To emphasise the silliness of the share price movement, the company states that even at the 20p placing and open offer price, the market capitalisation would be £10.3 million – a considerable premium to the sum of current cash on the balance sheetand the proceeds of both the placing and open offer.

Of course, the placees look to be pretty certain of a win: their shares will be admitted, it seems, ahead of a lifting of the suspension. Does that mean that whoever was buying at 125p will see their cash (or at least some of it) to the placees? Nice work!

As for any possible deals, the company tells us that:

the Company is not currently in any advanced negotiations with any target. In accordance with this focus on businesses within the e-commerce sector, and counter to speculation in the market, the Company emphasises it has no plans, nor intentions, to make acquisitions within the sphere of digital currency or blockchain technology.

So that appears to rule out the wild speculation that was going on when the shares first listed.

Well, good luck to all concerned. I hope it all works out and nobody gets shafted.

But this highly professional IPO has been a complete shambles both in terms of the paperwork (albeit a relatively minor transgression) and more importantly in terms of achieving an orderly market. I don’t know who is responsible for the latter, but someone surely should have realised what was going to happen if the newly listed shares were on bits of paper which had not been sent out, and people suddenly started buying.

As for those who piled in at up to 125p for stock which was not available, is anyone going to make their seemingly inevitable losses good, whilst placees appear to be in the box seat to cash in?

Is that how the London Stock Exchange wants its Official List to be seen?

Answers on a postcard…. 


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