July 5, 2019

Deal marks a significant step forward for Alasdair Haynes' stock trading venue, which went public a year ago.

Aquis Exchange, the stock trading venue run by City veteran Alasdair Haynes, is moving into equity listings with the acquisition of a market for the UK’s smallest companies.

Aquis said on July 5 that it will pay around £2.7m to buy Nex Exchange, which has 89 companies listed with a total market capitalisation of almost £2bn, from CME Group.

The deal, comprising £1 in cash and about £2.7m based on Nex’s working capital, marks a significant step forward for Aquis, which launched in 2013 and was taken public a year ago.

But the move into listings comes at a time when fewer companies in Europe are choosing to go public amid the uncertainty of the Brexit and fears about the health of eurozone economies. The value of equity deals in Europe, the Middle East and Africa fell 33% year on year to $65.3bn in the first half, according to Dealogic, the data provider.

Smaller companies, in particular, are choosing to stay private for longer, preferring to tap the growing pools of capital earmarked for off-market investment.

Haynes told Financial News that change was needed in the markets to encourage more young companies to raise equity capital, a process he said suffered from a lack of automation and concerns around liquidity.

He said: “[This deal] gives us the ability to disrupt a market that needs disrupting. Small and medium-sized companies are critical to the economy, but they are not going public... Aquis plans to bring in new technologies and processes such as automation and smart-data analysis to speed up and improve the listings system.”

Aquis will also look at ways of protecting small companies from short-selling, the process by which an asset manager bets that a group’s share price will fall, in their early days, according to Haynes.

Nex delivered a pre-tax loss of just over £2m in the year to March 31, 2018. Haynes said this would be reduced to £1m for the next two years by overhauling the group’s technology, and not by cutting jobs. He does not have any immediate targets for new listings, saying only: “This is not going to be a small business in five years.”

Haynes was chief executive of US broker ITG’s European operations in the decade to 2008 and went on to lead Chi-X Europe, the trading venue that is now part of Cboe Global Markets.

He launched Aquis to compete with other stock trading venues by charging investors a subscription to buy and sell on the exchange, similar to paying a monthly fee for a set amount of smartphone data. This differs from the traditional model, where stock exchanges take a cut of the value of a trade.

Aquis also has an expanding technology arm that provides services such as market surveillance and reporting software to financial institutions, such as large investment banks.

Haynes was named Industry Leader of the Year at Financial News's annual Trading & Technology Awards in June.

Aquis was advised by bankers at Liberum on the Nex deal, which is expected to complete in the autumn.

By Fareed Sahloul