New Ofex bid emerges

A CONSORTIUM of smaller company advisers is to make a last-minute bid for control of the troubled Ofex stock exchange.

Led by Keith Smith, chairman of advisers Nabarro Wells, the bid vehicle – Shield Investments - is offering a one-for-one swap for Ofex shares as well as a partial cash alternative.

The cash alternative for up to 50% of Ofex‘s shares at 6p per share compares with the closing bid price of Ofex of 5p a share on Thursday.

Smith, co-author of the Alternative Investment Market (Aim) handbook, is a former director of stockbroking firm Gerrard Vivian Gray and Sternberg Thomas Clarke.

The Shield team also includes Brian Moritz, chairman of Grant Thornton‘s capital markets team, and Jonathan Morley-Kirk, head of corporate finance boutique Fox-Davies Capital. Another director of Shield is Simon Mathias, a former director of stockbrokers Shore Capital.

Shield said that if its offer were successful it would then seek to list its shares on Aim or Ofex itself.

Ofex, the lightly regulated exchange run by JP Jenkins, is currently home to Rangers and Manchester City football clubs as well as a host of other small companies including brewers Adnams and Shepherd Neame. Despite its success in attracting smaller companies it has limited funds and warned in September that it would run out of cash by the end of November without new investment.

The Shield offer will see the Jenkins family lose control of the market - it currently has a 55% stake.

There have been several other interested bidders for Ofex since it revealed the extent of its financial difficulties.

These included Zyzygy, a cash-shell-turned-investment company, and informal approach from 535X, a rival service for matching buyers and sellers of small-company shares.

The conditional placing Ofex announced on 8 October would have left existing shareholders with 25.5% of the equity after raising a total of £3.1m, some £2.5m net of costs.

If Shield‘s partial cash alternative is fully taken up, shareholders will have just 20% of the equity in the new company plus £654,981 in cash, although if there is no take up they will be left with 40% of the new business.