Ofex rescue to change control

THE ailing Ofex market for smaller companies was thrown a £3.15m lifeline by the City today. A rescue party of London's smaller-company advisers led by market-maker Winterflood is backing a placing at 5p a share which will see the Jenkins family lose control of the market.

As part of the deal, which left the shares down 3/4p at 7p, the market's name will change to Ofex Plus. The fund-raising, equivalent to almost three-quarters of the enlarged share capital, could see Winterflood, part of investment bank Close Brothers, emerge with 16.6% of the equity.

The Jenkins family's stake will be diluted to 12% from 55%, and joint managing directors Emma and Jonathan Jenkins will step down from the board. Their father John, founder of the business, will remain only until a replacement as chairman is found.

Simon Brickles, the former head of the rival Alternative Investment Market who joined the company in January, is to become chief executive.

He said: 'We are very pleased that we have got backing from people like Winterflood and the market in general. It has been an interesting period in that the City, in terms of the smaller companies market, has rallied around. We are very pleased with the support.'

The company, which last week warned that it would run out cash by the end of next month, played down a number of recent bid approaches, most notably from Zyzygy, a cash-shell-turned investment group.

Ofex, whose company name will change to Plus Markets Group, said it regarded the approach as 'preliminary' and added that no detailed discussions had taken place.

Zyzygy yesterday suggested that it was gaining support for a possible takeover offer for Ofex.

Brickles and his new management team have identified cost savings of about £340,000 a year but he would not be drawn on where they would come from or whether there would be redundancies.

There was no word either on pay-offs for Jenkins family members leaving the business, although Jonathan and Emma were paid £65,000 each.

Brickles said that as they went towards a more mature strategy, 'it's important to have more broadly-based City support and a family business is probably not the right model for this market going forward'.

Twenty-four companies have left Ofex this year, with another string set to go. In an attempt to reverse the drift, Brickles will spearhead a drive to increase the number of regional companies gaining listings. With only 30% of companies outside London and South East, compared with 40% on Aim, 'we have batted under par with respect to the regions', Brickles said.