Financial services company Alpha Growth has announced its intention to delist from the London Stock Exchange, citing a “disappointing” lack of investor interest.
It said many small-cap strategies are now unable to invest in it and other smaller companies due to increasing constraints on their minimum size allocations.
Alpha Growth’s shares have had a lacklustre performance since listing in 2017, with their price falling from £1.50 when it initially went public to £1.25 by the time of the company’s announcement.
In a stock exchange announcement, it said: “The directors are disappointed that progress has not been reflected in the company’s share price and efforts to attract a wider investor interest in the company’s shares have had limited success, despite efforts by the company’s corporate broker.
“While Alpha is not the only small-cap company to be affected by its share price lagging its trading performance, the directors are determined to take action to resolve the situation.”
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It also noted that changes to the Financial Conduct Authority’s (FCA) listing rules last year also acted as an additional headwind.
The imposed movement of the company from the ‘standard list’ category to ‘transition’ could limit its ability to undertake merger and acquisition activity, which it intends to do to grow.
It could bypass this by moving to the ‘commercial companies’ category, but doing so “will involve significant changes to corporate governance arrangements and the appointment of a sponsor” that make it too impractical.
Alpha Growth instead decided it would be simpler to undergo its growth as a private company and re-list when it is more practical to do so.
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“While the board has identified a suitable sponsor and is enhancing its corporate governance arrangements, after a great deal of deliberation, it has decided it will prove far more practicable to complete any such material acquisitions off-market and then seek a re-listing of the enlarged group in the ‘commercial companies’ category as soon as practicable thereafter,” it said.
“By delisting, the company can progress the opportunities it has identified towards achieving its 2B Plan, thereby increasing shareholder value without factors tied to a listing impacting the opportunity.”