Potentially another financing route closed for young businesses?

Since the economic downturn in 2007, one of the oft-repeated statements is that is has been difficult - and remains difficult - for young companies to locate funding. The announcement on Monday that Plus Markets Group (formerly known to many people as Ofex), the UK-based exchange for early stage companies, would have to cease trading unless a buyer could be found is another blow in the increasingly difficult trading environment for fledgling companies.

Stock market consolidation over the last few years has been rife, but this consolidation has typically involved the high profile and globally recognised exchanges and has not typically been a result of necessity more a case of strategic manoeuvring by the exchanges involved. NASDAQ for example has been particularly active in terms of targeting exchanges in other countries over the last five years, and of course the saga of Deutsche Bourse and the New York Stock Exchange that appeared to have finally petered out in February this year. Consolidation by the larger exchanges has come as a result of being squeezed by market conditions and cheaper rivals, that in turn has led to them looking to acquire rivals to maintain market share or to move into non-core markets.

This morning has seen ICAP, the "world's leading interdealer broker and provider of post trade risk and information services group" linked as a possible buyer for Plus Markets Group. Should this deal proceed then it would see in the short term the 150-plus companies that are currently listed on Plus Markets retain their listing status. Longer term, if Plus Markets ceases to exist then the opportunities for young companies to raise finance via the public markets will become even more difficult.


Filed under: Deals, M&A, Rumours, dealmaking