Blackfriar: investors get the jitters ahead of Halloween

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AS Halloween approaches, the markets are definitely spooked.

The FTSE 100 has fallen by nearly nine per cent since hitting a 14-year high in September as fears grow about the fragile state of the European economy.

Healthcare stocks took fright yesterday after US firm AbbVie said it may pull the plug on a £32bn takeover of Shire.

Matthew Wells at Brewin Dolphin in Yorkshire told Blackfriar that investors are concerned about emergence of terror group ISIS, tensions between Russia and Ukraine, worries over the Ebola epidemic, the lack of a big policy to kickstart the struggling eurozone economy and continuing uncertainty over interest rate rises.

Amid all this trepidation, one of the UK’s challenger banks has been forced to ditch plans for an £800m flotation.

Aldermore, which provides specialist lending to 160,000 customers in the small business and household sectors, blamed the decision on investor jitters.

Several firms including Aldermore announced flotation plans in the last month after the Scottish referendum result removed uncertainty over the market.

Luxury goods retailer Jimmy Choo and Virgin Money, which has 2.8m customers, are still preparing to list but Scottish construction firm Miller dropped plans to list its housebuilding division last week.

Other recent stock market entrants have traded at levels below their flotation price, with over-50s holidays and insurance firm Saga down by 14 per cent.

Conditional trading in Aldermore shares had been due to start tomorrow, with the firm planning to raise around £75m in a flotation which would have valued the business in the region of £800m.

It said yesterday: “Due to the recent deterioration of global equity markets, Aldermore’s board and shareholders have elected not to proceed at this time with the initial public offering of Aldermore.”

A number of Yorkshire management teams which had their “heads turned” by initial public offerings are now potentially considering other options to raise money, according to Richard Taylor, Yorkshire investment director at the Business Growth Fund.

Word reached Blackfriar that Gear4Music, the fast-growing music retailer, had been among those looking at a public listing.

But Andrew Wass, chief executive and founder, told The Yorkshire Post yesterday: “I can confirm we are not considering an IPO in the short-term.

“Currently the situation in the market is not the best.

“We’re a growing business that’s private equity backed. We were assessing options and speaking to people about the future.

“At some point there will be a transaction.”

Life goes on, in other words.

* NEWS that PwC will refer small business clients to Funding Circle is another welcome boost for alternative finance.

The peer-to-peer lending website already has a similar deal in place with Santander.

Lending to small business via alternative finance has grown by more than 250 per cent in the last year, and has accounted for approximately half a billion pounds of lending in 2014 alone, according to the Big Four accountancy firm.

But adoption and awareness is lower in the North than the rest of the country, according to Leeds-based lender Rebuildingsociety.com.

James Meekings, co-founder of Funding Circle, said: “Some 77 per cent of businesses that have borrowed through Funding Circle would always come back to us first in the future.

“However, many small businesses owners are still unaware of the choice now available to them.

“We’re excited to be working with a trusted advisor like PwC to raise the profile of our industry.”

As part of the agreement, new Funding Circle borrowers will be able to access PwC’s My Financepartner, a subscription-based accounting service aimed at growth–oriented SMEs.

Slowly but surely, this sector is gaining ground.