February - April 2021 - Hybridan
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February - April
2021We are small cap brokers and advisers,
dedicated to fund raising, promoting investor
awareness and providing market-driven
corporate finance advice.
We raise capital for companies in the most efficient manner possible
and pride ourselves as being one of the few consistently profitable
broking firms in the City. This has been achieved through a highly
disciplined approach when seeking to create both corporate and
institutional relationships.
Coupled with our focus on our corporate clients, the quality of our
institutional relationships is of paramount importance to us and is
what sets us apart from our peers. These relationships have proven
invaluable during the lockdown period and enabled us and our clients
to continue to execute transactions. Our core investor base includes:
∙Institutional fund managers ∙VCT and EIS fund managers
∙Family Offices ∙High Net Worth Investors ∙Wealth Managers
We communicate the investment cases of our clients to the market
through equity research and frequent non-deal investor road shows.
We provide market-driven corporate finance advice to our clients to
help deliver shareholder value.
Member of the Member of the
LSE. CISI.
Regulated by the
FCA.
Began trading in Member of the
Expertise in
January 2007. QCA.
stocks quoted
and listed on the, Held in high
LSE, AIM and regard by
Aquis Exchange. corporates and
institutions.
2Offering
Corporate Equity
Equity Sales
Broking Research
Private /
Corporate Investor unlisted EIS
Finance Access /VCT
fundraisings
The three R’s
Research Roadshows Results
The element most closely
We believe that research within the remit of the
To gain a new holder
by a broker who has company itself. This
companies may need
spent years nurturing the applies to financials, or
multiple meetings, over a
trust of institutions milestones in the
period of months or if not
carries significant execution of the business
years.
credibility. plan as well as non-
financial KPIs.
The digestion of an in
depth research note is We stress the importance
We have shown that over
often an investor’s first of delivering relevant and
time smaller quoted
step in the DD process, material news flow
companies can build up
followed up by regular between the bi-annual
significant institutional
updates so that news is statutory reporting dates
holdings.
viewed in a relevant that prevail.
context.
3Our work
• A level of professionalism in handling investors and research normally found in a
large institution, but our expertise is in the small cap arena.
• No NOMAD, no wealth management and no market-making = no conflicts and
no hidden profit centres with different agendas.
• Corporate Broking is what we do best: our only interest is in looking after our
Corporate customers, which also means looking after our investors.
• Well connected, often presenting at events, CEO is Deputy Chairman on the
QCA Board and Chairman of the Small Cap Awards.
• We are constantly monitoring for developments both in our market and clients’
markets too, publishing our daily Small Cap Feast update which is sent to over a
thousand investors and other market participants.
• We are one team of people and are very accessible beyond normal working hours.
Case Study 1: One Heritage Group (LON: OHG)
UK Property Company IPO on Standard List
70
Since Appointment:
60 - Mentions in daily Small Cap Feast 1
Mkt cap:
- Number of research notes 1
£14.3m
50
Initiation of
40 coverage
IPO at 10p on research note
Standard List, published
30 market cap £3m
20
Family Office
market
10 purchases
Mkt cap:
£3m
0
23/12/2020 02/02/2021
4Case Study 2: Symphony Environmental (LON:SYM)
Profile raised, Family Office investors added
35
Since appointment (August 2019): Non-deal
- Mentions in daily Small Cap Feast 17 roadshow
30 - Number of research notes 12
- Number of non-deal roadshows 4
25
20
Further
Pre appointment Family Office
investor meetings purchases
15 and Family Office
purchases
Mkt cap:
£30m
10
Non-deal
5 roadshow
Mkt cap: Non-deal
£14m roadshow
0
22/11/2019 22/02/2020 22/05/2020 22/08/2020 22/11/2020 02/02/2021
Case Study 3: TMT Investments (LON:TMT)
Introduced first institution and successfully raised profile
Mkt cap:
9 $219m
Since appointment:
- Mentions in daily Small Cap Feast 25
8 - Number of research notes 28
- Number of non-deal roadshows 14 Non-deal
roadshow
7
6 $1.2m block
Placing $3.5m at trade
$2.43, including
5 first institutional
investor
4
Mkt cap:
3 $46m
2
$750,000 Non-deal
block roadshow
1 Hybridan
trade
Appointment &
non-deal roadshow
0
06 N
November 2015 06 November 2017 06 November 2019 01/02/2021
5Case Study 4: Sareum Holdings (LON:SAR)
Attracted supportive shareholders over a 10+ year period
3
For this chart: Mkt cap:
- Mentions in daily Small Cap Feast 57 £62m
- Number of research notes 42
2.5 - Number of non-deal roadshows 12
Placing to
2 raise £1.02m
at 0.6p
Placing to
Placing to raise £0.7m
at 0.7p Placing to
1.5 raise £1.1m
raise £0.78m
at 0.7p
at 0.4p
1
Mkt cap:
0.5 £6.7m
0
07 August 2015 07 August 2016 07 August 2017 07 August 2018 07 August 2019 07 August 2020
Case Study 5: Petards Group (LON: PEG)
UK engineering company recovery play
18 Mkt cap:
For this chart: £8.2m
16 - Mentions in daily Small Cap Feast 7
- Number of research notes 6
14
12
10
8
Mkt cap:
6 £8m
Non-deal Hybridan
Non-deal
4 roadshow roadshow introduced investor
market purchases
2
0
03-Jan-20 03-Jul-20 03-Jan-21
6Case Study 6: Rural Broadband Solutions (AQSE: RBBS)
Aquis RTO to address countryside broadband needs
5
4.5
Mkt cap:
RTO on Aquis, £14.4m
4 raising £2.5m
3.5 Initiation of
coverage
research note
published
3
Offer Price
2.5p, Since Appointment:
2.5 market cap - Mentions in daily Small Cap Feast 2
£7.6m - Number of research notes 2
2
04/09/2020 04/12/2020 02/02/2021
Case Study 7: ADM Energy (LON: ADME)
Energy investment company – connecting offshore Nigeria
with UK small cap generalists
7 Mkt cap:
£6.3m
Hybridan
6 appointment
5
4
Placing to
raise £0.67m Family Office
3 Initiation of
at 5.5p market
coverage research purchases
note published
2
Mkt cap:
Since Appointment:
£2.1m
1 - Mentions in daily Small Cap Feast 5
- Number of research notes 5
0
01-Jun-20 01-Sep-20 01-Dec-20 01-Feb-21
7Current Market Sentiment
• UK small cap market sentiment remains buoyant in 2021, continuing the
positive momentum of 2020, in which the AIM market rose 21% compared
to a decline of 14% in the Main market, a massive 35% outperformance.
• In a year dominated by bad news, AIM companies raised £5.3bn in 2020,
the most since 2010. It is perhaps fitting that on the junior market’s 25th
anniversary, it showed that when the chips were down and companies
needed access to capital quickly and efficiently, the UK junior listed
ecosystem of corporates, investors and advisers delivered resoundingly.
• Indeed, the value of all trades on AIM in 2020 was £83bn, the most since
2007, while the total number of trades last year was 17.1m, equivalent to
more than an eighth of all trades on the market in its entire lifetime.
• Not only that, the AIM market finished 2020 at its highest ever total
market capitalisation, of £131bn, up from £104bn in the previous year, even
as the number of companies listed dropped to 819 from 863. While that’s
the least number of listed companies since 2003, the average market
capitalisation is over £160m, up from £66m a decade ago, showing the
market is maturing with a trend to more established companies.
• While IPO activity was subdued in 2020, with private companies reluctant
to test the market in the face of the pandemic, activity started to pick up in
Q4, with 10 IPOs on AIM in the final quarter of the year raising £192m
compared to three in Q3 raising £76m. That compares to only 10 IPOs on
AIM in the whole of 2019, so life is certainly coming back to this
entrepreneurial SME market.
• Momentum has carried on into the first quarter of 2021, with many
predicting a bonanza year for IPOs. Among larger companies, Darktrace,
Deliveroo and TransferWise are all working on listings, following Moonpig
and Dr Martens which have recently listed.
• In the smaller company space, consumer products business Supreme listed
in the first week of February, with miner Cornish Metals and finance
boutique Baskerville Capital (to be renamed Oberon Investments Group)
expected to follow shortly.
• Some recent small cap joiners that have already made a splash this year
include bar operator Nightcap, up 85% since listing on AIM on January 13,
and One Heritage Group, a property developer focusing on the north-west
of England and a corporate client of Hybridan, which has quintupled in
price since joining the Standard List on December 23rd 2020.
8Outlook
• With vaccines being rolled out globally, the US election in the rear-view mirror and
Brexit having at least been passed in date terms, optimism in equity markets remains
high with investors keen to look at transactions and hear new investment stories.
• Our own deal pipeline remains strong, as it has throughout lockdown, both in the
public and private spheres, including a mix of IPOs, secondary fundraises, reverse
transactions and substantial vendor placings.
• While there is of course a risk that any future shocks may dampen investors’
enthusiasm, our message to companies seeking to spread their investment case or raise
capital is to strike while the iron is hot.
• As long as there is a compelling reason for capital raising, such as adding to revenue-
generating teams or making accretive acquisitions, or a management team wishes to
update investors on their equity story that has perhaps been overlooked and
consequently mispriced, investors will be willing to listen.
• While sectors like healthcare and technology remain in focus, companies in all sectors
have a good opportunity currently to pitch the investment community, as long as a
credible story for future growth is in place.
• As the world slowly emerges from the darkness of the pandemic, pent up demand for
goods, services, and natural resources should enable those companies who have
navigated 2020 successfully to emerge stronger than before and deliver strong returns
to shareholders who have supported them through a challenging period.
• We continue to urge small cap management teams to:
• Stay flexible when it comes to pricing new equity issuance, or if the discount
needed to raise the required amount is too deep, consider other forms of
financing including convertible loans.
• Continue in the quest to introduce your story to new investors, as it is a
worthwhile exercise to ensure it is on the radars of new potential investors,
and some may even buy in the market. If cash is king, liquidity is queen –
investors need liquidity more than ever and companies will only increase
liquidity by being proactive with investors when they do not expressly require
new funds.
• Ensure all possible pools of capital are approached, both professional and
retail, in the latter case potentially utilising one of several platforms that
specifically exist to service this audience.
• Make sure any available tax efficient structures such as Enterprise Investment
Scheme and Venture Capital Trust eligibility is obtained, given that this is one
area of the market that is certainly still investing.
910
CEO & Managing Partner,
Corporate Finance
Claire Louise Noyce
T: +44 (0)20 3764 2341
E: claire.noyce@hybridan.com
HYBRIDAN LLP
Director, Corporate Finance E: enquiries@hybridan.com
W: www.hybridan.com
John Beresford-Peirse
T: +44 (0)20 3907 0334 Follow us on Twitter @hybridanllp
E: john.bp@hybridan.com
Follow us on Linkedin
Director, Head of Corporate
Broking & Sales
Niall Pearson
T: +44 (0)20 3764 2343
E: niall.pearson@hybridan.com
Director, Head of Research
Derren Nathan
T: +44 (0)20 3764 2344
E: derren.nathan@hybridan.com
www.hybridan.com
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