UK 18:45 Saturday, 24 October 2026
Breaking news and expert analysis on fast-moving AIM and LSE listed shares
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
Continuing my look at the many investment companies on AIM I turn to Pires Investments (PIRI) to look at the costs involved and the oddity of these companies investing solely in listed companies.
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Comments
Drunken Sailor
The point of the “AIM shell game” is you pick up some failed company, flog off assets for £1 if you can, pay creditors 1p in the £ in a CVA and pick up the equity all for about £150k, raising a few £100k in a placing at the same time to keep the lights on whilst you reverse in something decent. The theory being that this is cheaper than getting a brand new listing through an IPO and you already have a diverse (locked in by the previous suspension) shareholder base and an accounting history (albeit a crap one). Now you can get a standard listing pretty cheap, there is no longer any point to the AIM shell game. The trouble is if you have not already got something decent to reverse in, then going out and finding that something decent could take a long time, but that does not stop the rumours being spread that something decent is just about to be reversed in. AIM did not used to give all that much of a shit about the rule that said you had to implement your investing policy in 12 months and as long as you had spunked some cash away on some gash investment or other that was ok. AIM has tightened up on this rule and we now see a lot of AIM investment companies suspended because they have breached this rule and heading towards the suspended for 6 months and you are delisted rule – TEA and 3LEG are 2 examples. Both may beat the 6 month deadline and comeback, but until they do it is tick tock and shareholders are trapped. The sands of time run out for 3LEG on 4 May (Jim Mellon backing and Jim can probably pull something out of the bag) and 4 Jun for TEA (they have made a lot of investments and it was a bit of a surprise when they fell foul of the newly invigorated AIM Reg – does AIM Reg have some issues with some of the personalities involved in this?). It might be worth doing a piece that lists all the shitty little AIM investment companies that are on death row because of this and then SP can play Iron Maiden Hallowed be thy name as the sands of time run out.
https://www.youtube.com/watch?v=7vP2hFFV57E
So an investment company that has to invest, does not have much cash after expenses and the clock is ticking! How are they going to do it? The easiest way is to do paper swaps with other investment companies in the same stable – bargain! not only can 2 shite AIM investment companies be seen to be investing, you can overvalue your paper and overvalue the other paper and pretend both sets of paper are worth far more than they really are – even bigger bargain for both parties! BBMs fall for tricks like this. With the cash you have, the easiest thing to do is to buy shares in another listed company. No point buying a tiny stake in some FTSE company, the shares may go up by 20% if you are lucky. No a nice big stake in some AIM dog is much more impressive and they could 10 bag (if the SP has fallen by 90% and given the non existent reverse Newtonian law that what goes down must go up, believed in passionately by BBM’s means a 10 bagger is a cert and any more is a bonus).
Interestingly PIRES provided pre IPO funding to RAME and on listing did make a reasonable profit, but when you take out the admin and listing maintenance costs of PIRES, that all got eaten away very quickly. I made this point to a director of PIRES, who is one of the nicest most honest city blokes I know, and when he resigned and I asked him why he resigned he said that I was right and he no longer wanted to be a part of it (like I said a very nice and honest bloke and a wonder that he ever made any money in the city).
Cynical Bear
@Drunken – would be interesting analysis. Off the top of my head I know that GUSC and ECV are also currently in that 6 month suspension period. Am sure there’s more.
Also would be good to highlight those approaching the initial 12 month deadline too as think TEA’s suspension caught a few people out.
On the more general point, I smiled last month when one of the newer investment companies around, Gavin Burnell’s Onzima, made its first investment…..into Glenwick, another new incarnation of an investment company!
Tom Winnifrith
Gusc aiming to complete RTO by mid march and return – not as an investment company. work is advanced. Will know more on state of play at TEA in that regard next week
Drunken Sailor
Sands of time for GUSC run out on 9 Mar – cutting things very fine! Of course if AIM do boot them off under the 6 Month rule they would have pretty well all the paperwork in place to IPO on standard list, so no major dramas.
I don’t see CEB or whatever they call themselves these days making it back in time, as they seem to have a complete load of rubbish that they are calling a reverse in order to save their listing.
I would expect TEA to make it back, as the seemed to get caught on a technicality, though they will still be a shitty little AIM investment company.
With Jim Mellon behind 3Leg I would expect that to make it back too, but I have deep reservations about micro cap Bio Tech companies, which is what I believe Jim is after.
An analysis of all the investment companies who are either suspended or about to be suspended and the odds of them firstly making it back at all and secondly being any good when they come back would be interesting.
Regardless of whether a shell is intending to do an RTO or not they all start their new life as shitty little investment companies. With Standard listings so cheap and apparently easy there seems to be no point to any of these companies, other than what the pump and dump crews can make out of them. Shareholders who were trapped in the original dog don’t generally sell because their holding is still worth so little when it comes back as an investment company. Those who put in the fresh equity don’t sell as they are waiting for their killing in the next phase, so all pump and dumpers need to do is convince existing shareholders that the way to get their losses back is to average down, because new management yadda yadda.