Cloud technology provider Loopup has moved to cancel its listing on London’s AIM market due to the better funding opportunities available on private markets.
The move has sent its stock price crashes, falling 66.1 per cent to just 70 pence, leaving it with a £1.4m market cap.
Following an extensive review from the board, the Shoreditch-based firm argued that the ability of the company to raise funds within public markets was limited, particularly given its £4.2m market cap as of last week.
The group estimated that it needs to raise around £9m, to pay off its £6m in debts and to continue growing its cloud telephony business.
However, it said that it “does not believe that an equity fundraising for the £9m short-term cash requirement would be possible through public markets”.
Private markets have boomed in recent years, with the private equity industry sitting on trillions to spend on unlisted companies in the hopes of massive returns later on.
In contrast, public markets have suffered, as groups increasingly move away from a London listing, and continue to start listing later and later.
Loopup has already received indications of intentions to invest a total of £6.2m from four private investors, it said, but only if the company is private and its debts are paid off.
“Furthermore, the board believes that the scale of medium-term funding that will be needed to maximise shareholder value is more likely to be found as a private company and specifically from the venture capital and/or private equity investment communities,” it added.
Loopup began as a online meetings-based service, but the pandemic forced it to pivot away as giants such as Microsoft Teams developed rapidly and pushed them out of the market. Since then, it has shifted its focus to the field of cloud telephony.
Shareholders will meet to vote on whether to delist on 11 April, with a 75 per cent approval rate required.
In addition, the group said today that its full year revenue was expected to be £21.2m, a 34 per cent increase in like-for-like revenue from the previous year.
Steve Flavell and Michael Hughes, co-CEOs of the firm, said: “The priority for us now is to ensure we have the right funding to continue this growth and deliver on our potential.
“We have exhaustively explored all options to arrive at today’s announcement, with the board unanimously concluding that this proposal to de-list and conduct a private fundraising is in the best interests of the group and of our shareholders as a whole.”