Octopus Group has quietly pumped £25m of its own cash into London’s beleaguered AIM market in a bid to take advantage of “mispriced” smaller companies, it has been revealed.
Simon Rogerson, chief and founder of the holding and investment firm that spawned Octopus Energy, said he was “high conviction” on the future of the London Stock Exchange’s junior market and put his “money where [his] mouth is” last November.
“This is mispriced. We’re really comfortable and confident in the outlook for [the market],” he told City A.M. “We’ve been running money in that market for the last 15 to 20, years, and we are very high conviction.”
The investment came off the group’s own balance sheet and was spread across 16 separate companies, he added, including Keywords Studios, Gamma Communications and GB Group. Keywords was snapped up by private equity firm EQT in a £2.2bn in July.
Backing from Octopus comes as a vote of confidence for AIM after a torrid 12 months in which it has been rocked by a flood of companies delisting or being picked off in take-private deals.
A total of 80 firms delisted from AIM in the 12 months to the end of June, bringing the total number of companies on the market down to around 720, the lowest level since 2002.
“For all kinds of fundamental reasons, and we know these companies inside out, you should be putting capital into them, whether you’re an institution, whether you’re a retail investor,” Rogerson added.