Not all it's cracked up to be

15-Oct-2008

Colin Cottell

It’s been another difficult couple of weeks for recruiters, with only three shares in our table registering a price rise.

With valuations in the sector continuing to fall, as stock markets take fright over the prospects for the economy, directors will be questioning whether the advantages of being listed are all they are cracked up to be. While raising money in the market and providing liquidity to shareholders is a piece of cake in the good times, these benefits are not so apparent when share prices are depressed by an unhealthy cocktail of general economic gloom, and (some would argue) an overly pessimistic view of the sector.

Dean Kelly, chief executive of Synarbor, which delisted from AIM on 26 September, told Recruiter that in these depressed markets, being listed was no longer ‘worth the candle’, given the additional regulatory and reporting requirements required of publicly listed companies. Not to mention all those City presentations.

“Time, effort and money, and if you are then not getting anything out of it, it’s a bind,” he explained. “If you can’t use the market for what it’s there for — for us it’s a bit of a pain, basically.”

“I think we will see others delist as the market gets tougher — especially on AIM,” Kelly added.

However, Miles Hunt, chief executive of Empresaria, told Recruiter that despite depressed prices, the company had no plans to delist. “Our view is that the markets will turn,” he said. “We expect to be able to take advantage of those markets to raise capital, and to improve liquidity for our minority shareholders.” However, he added, he understood why at the present time others might question this view. Quite.