Over 50 of the Island’s investment and wealth management professionals joined KPMG and WH Ireland at Bar George on the morning of Wednesday 18th March for a breakfast seminar on AIM transactions.

KPMG’s director of Deal Advisory, Russell Kelly, opened the morning’s presentations by thanking attendees before promptly introducing Kristan King, a senior manager at KPMG specialising in Deal Advisory. In a short presentation entitled ‘Why the Isle of Man?’, Mr King outlined to the audience the Island’s proposition and role in supporting the London Stock Exchange’s AIM Market, explaining that its reputation as a stable, efficient and well regulated jurisdiction with a commonality of law with the UK that has resulted in its becoming home to a significant portfolio of 41 listed entities with a combined market capitalisation of over ?4.4 billion.

Mr King went on to explain that listing activity on the Island had diminished from the levels seen during 2007/08 and that as of 2015 the Island’s nearest competitor Jersey now represents the busiest of the crown dependencies. The Island’s response, Mr King emphasised, must be to identify those active sectors best suited to the Island’s skill-set and specific tax and regulatory regimes and to market those benefits accordingly. Mr King then reminded the audience of the importance of the role of reporting accounting during the stock-market listing process, making particular reference to the Institute of Chartered Accountants in England and Wales’ (ICAEW) guidance on financial position and prospects procedures, also known as TECH 01/13 CFF. In drawing to a close, Mr King made reference to best practise guidance for directors considering a stock market listing, including the implementation of robust management and reporting frameworks that deliver “the right information at the right time” and facilitate effective decision making at board level.

Paul Shackleton, Corporate Finance Director at financial services provider, WH Ireland, then took over with the first of two morning presentations, entitled ‘Listing on AIM’. Drawing upon almost 20 years’ experience as a nominated adviser, or NOMAD, in London’s investment markets, Mr Shackleton began by first walking the audience through the independent public offering (IPO) process. Phase 1, preliminary considerations, lasting up to six months, included tackling such issues as suitability for listing, which Market,  capital structure and Board members’ reputations, as well as the scope of due diligence , the importance of timing, audit procedures and in particular selecting experienced and suitable advisers. Phase 2, Mr Shackleton explained, typically lasts a further 8 to 12 weeks and involves site visits and legal and financial due diligence; , legal matters include intellectual property, title to assets, litigation and environmental considerations, while the accounting work focuses on historic financial information, working capital and, financial position and prospects procedures. (Reporting procedures). Phase 3, the final stage and at a further 4 weeks, concerned marketing to potential future investors via road shows to ensure investor oversubscription and maintain price tension at the date of launch. In closing, Mr Shackleton provided a quick summary of life as a listed company before introducing Manx Telecom’s Chief Financial Officer Gary Lamb to elaborate on his first hand experiences.

In an enthusiastic presentation, Mr Lamb opened by touching upon his previous experience at Strix, and with local tech manufacturer Bladon Jets, before describing Manx Telecom’s journey from a highly leveraged private equity owned concern with a ‘grow and sell’ mentality to a highly successful publicly  listed company. Mr Lamb began by describing the IPO process MT began in October 2013 from the pre-marketing stage, through to the due diligence process and a two week roadshow prior to listing. He then described Manx Telecom’s success in achieving a 1.7x investor oversubscription rate prior to its listing on 10th February 2014 and the raising of ?153 million with which the board repaid almost two-thirds of its debt and repaid its principal shareholders HG Capital. After describing the regulatory benefits of working with AIM, Mr Lamb then outlined the broader benefits of becoming a listed entity including the reduction of debt, offering wider share ownership, gaining access to capital market funds, regaining greater control of the company’s destiny and becoming part of a project which is good for the reputation of the company and the Isle of Man.

The process is not without its challenges, Mr Lamb was keen to add, and includes a great degree of scrutiny, tight reporting deadlines, the potential for board member distractions and significant cost to list. In closing, Mr Lamb identified Manx Telecom’s current shareholders and new developments within the investment markets before leaving the audience with a series of lessons including planning for business distraction, appointing a strong plc board, ensuring careful communication and using the appropriate advisers throughout.

The morning’s final presentation saw Mr Shackleton return to the floor to deliver a presentation entitled ‘Market & Sector Performance’. He began by explaining that London’s AIM had enjoyed strong performance throughout 2014, with more activity than 2011/12 and 2013 and a total of 82 IPOs occurring. AIM performance during 2015 Mr Shackleton described as feeling slower for IPOs, however with the secondary market still functioning but the forthcoming general election disrupting activity during what would traditionally be the annual fundraising period. Mr Shackleton noted it was promising to see that most fund managers are looking to invest in UK business, although he noted that companies with dollar earnings are undergoing the most advanced recovery. Healthcare and biotech, as well as telecoms and tech represent popular investment vehicles at present with natural resources and support services becoming less so due to the oil price crash and worries about commodity exposure. To close, Mr Shackleton touched briefly upon WH Ireland itself, noting that the 143 year old, top 3 broker has raised ?223million since 2014 and completed ?729million in transactions since 2012 for 98 corporate clients and manages ?2.7 billion in assets for 20,000 private clients. Mr Kelly then returned to the floor to thank presenters and attendees for contributing towards a morning’s insightful discussion.

Commenting on the AIM Deal Advisory breakfast, Mr Kelly said: “The Island has historically had a critical function in the City, bringing highly regulated expert support and leading companies to the investment markets. Add to that the considerable degree of change in today’s markets and the imperative for the Island’s wealth management professionals to gather together and discuss the Island’s proposition quickly becomes clear. The morning’s presentations provoked some enthusiastic and interesting conversation around our future role in the investment markets, and I hope that everyone who attended could take something from it. We have seen the influence of one of the Isle of Man incorporated AIM listed companies this week with Optimal Payments Plc’s agreement to acquire Skrill Group for €1.1 billion, a transaction that KPMG has advised on.  I would like to thank Manx Telecom’s Gary Lamb, and of course, WH Ireland for their valuable contribution.”

Photo - L-R: Russell Kelly (KPMG), Paul Shackleton (WH Ireland), Kristan King (KPMG) and Gary Lamb (Manx Telecom).