February 8, 2021

Shares to float on new stock exchange targeting growth companies seeking retail investors.

By Jim Armitage, The Evening Standard

8th February 2021

A UK tech company dubbed the "mini Hut Group", which develops e-commerce platforms for western brands trying to break into China, is floating shares in London valuing it at around £50 million.

Samarkand is listing on Aquis, a new stock exchange aimed at rivalling the London Stock Exchange's junior Aim market.

London-based Samarkand is to raise £10 million from the float to build its business, which puts western brands onto its proprietary software technology called Nomad, which takes care of the transaction, the distribution, the logistics, payments and analytics.

Customers include Planet Organic and Temple Spa, while the group has also grown its own brand in Probio7, a health supplement.

Comparisons with The Hut Group are being made because THG was one of the most successful floats of recent years on the London exchange, with the group now valued at nearly £7 billion. THG floated at 500p last September and is now trading at 720p.

Samarkand founder and Chief Executive, David Hampstead said there were no shareholders selling out in the float, rather that the company was seeking to raise £10 million of new funds to invest in its software and potential acquisitions.

He added: "With the full impact of Brexit starting to be felt by brands and retailers it has never been more important for companies to reach new markets. For the first few months of 2020 China added 92 million new ecommerce consumers, more than the entire population of Germany, bringing the number of active consumers to 715 million."

The IPO is seen as a big win for Aquis as it seeks to gain ground in its battle to rival the longer established Aim market, run by the London Stock Exchange.

Brokers VSA Capital have launched the shares with a new type of paperwork for investors known as a Growth Prospectus.

This is a simplified, shortened form of prospectus which allows qualified retail investors to participate as well as institutions and makes it cheaper and less onerous for small companies to issue shares to the public.

New protections brought in for retail investors by the Financial Conduct Authority's predecessor, the Financial Services Authority, in 2015, have had the side effect of making it far harder for members of the public to invest because they cannot afford the kind of advice the new rules insist upon.

Growth prospectuses for SMEs were launched in 2019 but have not been commonly used.

Most IPOs launch with an "admission document" which can only be used by institutional investors.

VSA said it has received interest from around 500 high net worth retail investors as well as big institutions. Schroders is believed to be among those doing due diligence with a view to investing in Samarkand.