Exploring AQSE

We act as auditors to small cap plcs listed on AQSE, AIM and Euronext and also as reporting accountants on IPOs. In this post we explore the Aquis Stock Exchange (“AQSE”) in more detail.

What is AQSE?

AQSE is a fast growing stock exchange which targets growth companies which are small to medium in size. Its a Registered Investment Exchange in the UK and is regulated by the FCA. Companies listed on AQSE are eligible investments for the full range of unlisted company tax reliefs, including EIS, capital gains, stamp duty and inheritance tax.

Market overview

As at February 2023 there were 105 companies listed on AQSE with an average market cap of £16m.

1 or 2 new companies tend to list every month and they typically raise £1m-£3m upon listing. There were 22 new issues in 2022, raising a total of £31m.

Existing companies often need to raise further money, for example to help with expansion, finance acquisitions or to fund working capital and there were £32m further issues in 2022. In Feb’23 Invinity Energy Systems Plc raised £21.5m in a very successful share issue.

Trading activity

The chart below shows that there are typically 2,000 to 3,000 trades per month with a total value ranging from £10m to £20m. However, we note that AQSE is generally seen as less liquid than larger stock markets.

Why list on AQSE?

Simply put, its far cheaper and faster to list on AQSE compared to AIM or LSE.

After the FCA’s rule changes its also become much more difficult for companies to raise money on LSE as there is a minimum market cap of £30m.

Whereas companies listing on AQSE only need a minimum market cap of £700,000.

We also note that AQSE is gradually growing whereas AIM is in danger of declining. AIM used to have 3,600 companies listed at one time, but its less than 900 currently.

Is it worth listing?

Historically our tech startup clients have raised money from VCs and angels, ranging from £100k upto £70m. AQSE probably wouldn’t be the first option for a tech startup, but it may be worth exploring, especially if a company is starting to generate revenue but might not be able to achieve the typical hockey stick growth that VCs expect.

Established companies from other sectors have tended to rely on bank loans, bonds or convertible loans, but they have generally needed significant assets or personal guarantees in order to raise finance. So if a company doesn’t have significant assets then AQSE would definitely be worth exploring.

But if loan finance is available, the loan interest costs and related covenants are likely to be cheaper and less complex than listing on AQSE.

The downsides of listing

The listing process requires a lot of time and effort from management and all the advisory fees and listing expenses typically start from around £80k-£100k. Most of the listing costs would be deducted from the IPO but some of the initial costs would need to be prepaid before the IPO can get fully underway. Although founders may be able to seek pre-IPO fundraising from investors to help with the initial listing costs.

Once listed, a company has to comply with strict AQSE rules and has to make regular announcements about its activities and certain events. There are also very tight deadlines for publishing interims and annual accounts.

Categorized as Plcs

By Mohammed Haque

Mohammed is a chartered accountant (ICAEW) with many years of experience in dealing with complex audit, accounting and tax matters.