Investing Policy

RNS Number : 7680E

AIM Investments PLC

29 December 2009

 



29 December 2009

AIM Investments plc (the "Company")

Investing policy

The Company would like to notify its shareholders of the investing policy of the Company following the issue of new AIM Rules in relation to investing companies.

Qualifying Investments

AIM investments plc is seeking to identify and invest in good quality and high growth companies seeking admission to AIM, PLUS or other junior markets in Europe ("relevant stock markets").  The following list is the qualifying criteria for investee companies although the list is not intended to be exhaustive and the board will exercise discretion where necessary on each investment. 

• The key consideration will be the quality of the investee company and whilst there will be a preference for those operating in Brazil, Russia, India and China ("BRIC regions"), other geographical locations will receive equal consideration

• Growth potential will be the key determinant above any specific industry sector 

• The investee company enjoys a good reputation within the territory in which it operates

• Strong existing management team although strengthening of the board of the investee company will be a consideration

• Accounting practices to IFRS or equivalent (preferably at least 3 years of audited accounts available)

• The investee company has a history of profits with evidence of further growth and is currently earning or on target to achieve approximately £1million pre-tax profits per annum

• Suitably robust or diversified business model (preference for any Intellectual Property to be owned)

• The investee company will have a target market capitalization of circa £5-15 million for admission to the PLUS Market or £15-50 million for admission to the AIM market

• The investee company has a history of robust corporate governance and provides transparency for potential investors 

• Preference of directors / shareholders of investee company to part with equity rather than cash in order to fund the costs of an IPO

• Some relevance of the underlying business to relevant stock markets

• No material ongoing litigation 

Investment Strategy

The Investment Strategy is broadly that investments will take the form of a series of convertible loans to investee companies to fund the admission process to a relevant stock market. The proceeds of each loan will be held in a solicitor's client account or other stakeholder arrangement and used to settle all professional fees incurred in relation to an admission to the relevant stock markets.  The convertible loans will convert to equity at the admission price, which may be converted on or up to six weeks prior to admission to the relevant stock market. 

Investment Process

1. Potential investee companies that meet the qualifying criteria will be identified by AIM Investments plc and any other professional service providers in the relevant territory. Marketing and remuneration packages for successful referrals will optimise performance at this stage.

2. Any prospective investee company satisfying the qualifying criteria will be required to sign an initial engagement letter

3. Further due diligence will be carried out by AIM Investments plc and the relevant professional advisers for that territory.

4. A detailed investment proposal will be prepared by AIM Investments plc for submission to the Board.

5. The Company anticipates that each investment in an investee company will be between £100,000 and £500,000 although this will be entirely at the discretion of the board.

6. The investment proposal will be circulated to at least two firms of Nominated Advisers, PLUS Advisers or any other relevant party to test the appetite of the market.

7. The Board will decide on whether or not to invest in the prospective investee company following the results of the preliminary due diligence and test marketing with Nominated Advisers, PLUS Advisers or any other relevant party.

8. The final decision on whether the investment will proceed will be made by the Board of AIM Investments plc.

9. Agreements will be put in place between AIM Investments plc, the investee company and a team of professional advisers to commence the process of gaining admission to the relevant stock market. Fixed cost budgets and contingency working capital will be agreed wherever possible. It is anticipated that all fees (save for those that have to be paid out for disbursements to third parties) will remain in the solicitor’s client account until the admission of the investee company to the relevant stock market

10. The professional team will work together to progress the admission of the investee company to the relevant stock market. AIM Investments plc prefers that the investee company gains admission to the market via an introduction and that no money is raised at the time of admission.

11. AIM Investments will seek up to four times (but not less than three times) the value of its investment in equity at the admission price for assuming the risk and the cost of admission of the investee company to the relevant stock market.

Realising Investments 

All investments made by the Company will be passive investments. It is not anticipated that any negotiated equity stake will be greater than 20% in the investee company. Additional board members may be provided to strengthen the board of investee companies but they will be independent of AIM Investments plc.

The length of time that investments are held will be at the discretion of the Board although it is anticipated that at least the value of the original investment amount will be realised prior to (in a pre-IPO sale of some description) or on admission to the relevant stock market.

Moreover, the length of time each investment will be held will also depend on negotiations with the appropriate advisers to the investee company subject to lock in rules of the relevant stock market and any orderly market agreements. Clearly, the Company would prefer to avoid lock in agreements where possible in order to increase the liquidity of the investments held. 

However, the Board will make the final decision on when to sell shares and may choose to appoint a fund manager at some point in the future to manage the Company's equity investments and cash. 

Spread of Investments

The Board will seek to diversify risk by making a spread of investments in companies from different territories but if particularly strong and reliable ties are developed in certain geographical areas, as well as a good stream of potential investee companies, it will not be required by its investment policy to look to other territories. In all investment decisions, the level of risk exposure will be considered as well as potential reward. 

The Company intends to make investments of up to £500,000 in each investee company  and its total investment level will be dependent on the initial funds raised plus the returns that are realised on the investments themselves. Therefore, the maximum exposure to any one investee company should diminish over time and with admissions executed. 

Gearing and Cross Holdings

The Company may consider conservative gearing if deemed appropriate. No cross holdings are anticipated. 

Returns and Dividend Policy

The Company seeks to gain up to 4 times (and a minimum of 3 times) the level of its initial investment in equity at the admission price of the investee company. These assets, either realised cash or retained shares, will provide strong asset backing for the Company. A dividend policy will be established once the cash position of the Company is strong. As the number of admissions to the relevant stock markets is limited in any one year, there is a clear point at which cash reserves are likely to become surplus to the Company's requirements and will be re-distributed to shareholders by way of a dividend. 

Time Constraints

The Company must make an investment by no later than 30 April 2010 to fulfil certain AIM rules.

  For further information, please contact:

Andrew Fletcher/ Alexandra Eavis AIM Investments plc www.aiminvestmentsplc.com	08702 701 111
Ray Zimmerman/David Newton/Jonathan Evans ZAI Corporate Finance Ltd www.zaicf.com	020 7060 1760

 

END

 

 

MSCFKLFLKLBXFBV