UK Listing Options: Aquis Stock Exchange (AQSE)

By Clive Hopewell, Sharon O'Donnell, Freddie Spearman

05-2020

In March of this year, the FCA approved Aquis Exchange's acquisition of the NEX Exchange from CME Group in a deal reportedly worth £2.7million. As part of the acquisition, the NEX Exchange has been re-named the Aquis Stock Exchange (AQSE). Aquis's stated aim is to build the AQSE into the "supportive home for quality growth businesses".

AQSE

The AQSE is a recognised investment exchange, and currently operates two primary markets: the AQSE Main Market and the AQSE Growth Market.

The Main Market

The AQSE Main Market is designed for larger, more established companies and is an EU regulated market. It only admits securities to trading that are admitted to the official list in the UK or another EEA country. This means that in the UK, companies that list on the AQSE Main Market will need to comply with the Listing Rules and Disclosure Guidance and Transparency Rules and with UK Corporate Governance standards, just as a company admitted to the LSE’s Main Market would. Listing on the AQSE Main Market also requires the publication of a prospectus.

Similarly to the LSE Main Market, companies applying to list on the AQSE Main Market must comply with a two-stage application process (i) companies must apply to the FCA for admission to the official list, and (ii) apply to the AQSE to join the AQSE Main Market. The requirements for admission to the AQSE Main Market are set out in the AQSE Main Market Admission and Disclosure Standards, and in the Listing Rules.

Listing on the AQSE Main Market may be of benefit to companies which are accredited for having a positive social environmental impact, as they will be listed in the Impact Segment, which distinguishes these companies for impact-conscious investor audiences.

The Growth Market

The AQSE Growth Market is a multilateral trading facility, and is more suitable for smaller companies seeking access to investment than the AQSE Main Market. The eligibility criteria and regulatory requirements are less onerous than for the AQSE Main Market, especially since no prospectus is required. Companies are still required to complete an AQSE Exchange Admission document, but this is a more manageable task than producing a prospectus.

Many of the eligibility criteria for the Growth Market are fairly simple to fulfil e.g. 24 months' audited accounts, at least ten per cent free float, and the appointment of 1 non-executive director. These features have the benefit of enabling entrepreneurial companies seeking a faster listing with lower ongoing obligations to gain access to investors at a lower price.

As a flavour of the types of companies on AQSE Growth Market, both Chapel Down plc and Adnams plc are currently listed, with market capitalisations of approximately £107 million and £40 million respectively (April 2020).

The AQSE Growth Market is also a Recognised Growth Market by HMRC, which means that trades executed in UK companies on this market are exempt from UK Stamp Duty and Stamp Duty Reserve Tax.

Proposed changes to the AQSE Growth Market

On 1st May 2020, AQSE issued a consultation document which proposes the splitting of the AQSE Growth Market into two new segments, APX and AXS.
Companies already admitted to the AQSE Growth Market with a market capitalisation of more than £10million and more than 35% of their securities in public hands would automatically be included on APX.

Feedback on the proposed changes has been requested by 15th June 2020.

How does the AQSE Growth Market compare to AIM?

Like the London Stock Exchange's Alternative Investment Market (AIM), the Growth Market provides companies with access to both institutional and retail investors, and is particularly beneficial for early stage, entrepreneurial companies. One of the reasons for this is the lower estimated costs of entry, more lenient admission requirements and less onerous continuing obligations. 

AIM listed companies require the appointment for a NOMAD and a Broker at all times; AQSE Growth Market companies are only required to appoint and retain an AQSE Exchange Corporate Advisor, meaning the ongoing cost of an AQSE listing can be lower.

However, the AQSE has not yet attracted AIM's breadth of company listings or investor interest. This can be seen in its total market capitalisation of approximately £1.5bn, compared to AIM'S £88bn (April 2020). This may detrimentally affect the fundraising capability of an AQSE Growth Market listing, and is a factor companies should bear in mind when deciding where to float.

Companies should also be aware that whilst on AIM there is no free float requirement, an applicant on the AQSE Growth Market must ensure a minimum of ten per cent of the securities for which admission is sought are securities in public hands.

For further information about the AQSE and the listing process please contact one of the contacts in our Capital Markets group.