PLUS Markets require a Government inquiry

In an article in today’s Daily Telegraph (‘Capitalism must be redefined in order to be seen as a force for good’), Lynn Forester de Rothschild, co-chair of the Henry Jackson Initiative for Inclusive Capitalism Task Force, says “It means nurturing start-ups and small businesses which form the backbone of our economy.”

What a pity then that an engine of economic growth, PLUS Markets Group, is being tossed around in a sea of uncertainty. After months and months of market rumour and doubt, it has been announced that Icap, the world’s leading interdealer broker, is buying the PLUS-SX. This has 145 companies who have been treated disgracefully and still have an uncertain future. This is because:

a) Under the Financial Services and Markets Act 2000 the deal represents a change of control and therefore requires the permission of the Financial Services Authority (FSA)

b) The transaction is a disposal under AIM rules (PLUS Market shares are traded on AIM) and therefore requires shareholder approval. This involves the preparation of a circular and a general meeting; no timings have been given.

c) Over the weekend the Middle East Investment Group Amara Dhari, which own 17% of the stock, said that it would push for PLUS to retain the stock exchange.

So what happens in the interim? Answer: uncertainty and perhaps chaos.

The 145 companies, whose future on PLUS Markets remains uncertain (although Icap say they are launching a charm offensive), are being inundated with offers from GXG Markets, BritDAQ, ShareMark and The Guernsey based Stock Exchange amongst others.

The FSA and the Treasury have known for months that this was the likely outcome. PLUS Markets have trading losses of £5,684m. The management lost their way months if not years ago.

Small-cap equity markets are the engines of growth which Lynn de Rothschild craves.

This situation warrants a Government enquiry. As I have said before, as evidenced by my blogs on TFA and on Enterprise Britain this situation need not have happened.

By Tony Drury

Tony is chairman of Ford Eagle Group whose shares are traded on PLUS Markets