Aquis moves closer to profitability ahead of battle for IPOs

September 19, 2019

Aquis Exchange, the stock-trading venue founded by City veteran Alasdair Haynes, moved closer to profitability in the first half of 2019 ahead of its plan to start competing for company listings.

Revenues rose by more than 160% year on year to £3.4m over the period, helping Aquis to narrow its net losses from £3.2m to £621,000, according to a September 17 statement.

Analysts at Liberum, the company’s broker, said revenues were 5% ahead of their full-year run rate, which uses current trading to estimate annual performance. Liberum estimates that Aquis will be profitable in 2020.

Aquis uses a subscription model akin to a mobile phone contract, rather than taking a cut from every trade, and has been steadily building its portion of trading volumes in shares across the EU.

It said the revenue growth in the first half of the year was due to existing members, including banks, increasing their activity on the venue, new members and technology licensing.

Aquis next wants to go head-to-head with traditional stock exchanges for initial public offerings.

It is awaiting regulatory approval of its acquisition of Nex Exchange, a deal it expects to complete in the autumn. The deal will transform Aquis into a recognised investment exchange, the highest regulatory status, and propel it into the battle for IPOs.

Haynes, who founded Aquis in November 2013, said he wants to give retail investors more opportunities to invest in IPOs. “There’s a massive move into the private equity business, which is opaque and tends to be more expensive, and therefore it’s very difficult for companies to come and list,” he said.

Aquis is considering a hybrid market for stocks in smaller listed companies, running regular trading alongside long auctions to concentrate liquidity. Haynes said: “We could have long periods of auctions, allowing people to get real price discovery within the small-cap and micro-cap business line.”

Another option under consideration is banning investment managers from short selling so-called growth companies. Short sellers bet that shares will fall rather than rise in value, typically by borrowing shares and returning them after the price drops.

Haynes said smaller growing companies required protection from this practice.

He said: “You don’t go and trample all over a new plant that you’ve just put into the ground. You need to water it, you need to care, and you need to make certain it is allowed to grow. Once it’s a big plant, you know, you can prune it and do whatever you want.

“My view would be, if you think it’s expensive then don’t buy it.”

Aquis’s shares have risen by 75% since its own float in June 2018.